Hobbs v PGK Pty Ltd[2018] QCATA 156

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

1. [1]
   Ms Hobbs was a tenant of a house owned by Mr Bellos at Sunnybank Hills. She left the home after a 1 month tenancy and there was a dispute over the bond.
2. [2]
   Ms Hobbs applied to the Tribunal to recover her bond of $1,420. Mr Bellos through his agents, the first respondent, made a counter application against Ms Hobbs for compensation for damage to the property totalling $3,507.80.
3. [3]
   The matter was heard by an Adjudicator at Richlands Magistrates Court on 31 January 2018 with the learned Adjudicator ordering that the Residential Tenancies Authority pay $1,350 from the bond to the agents and the remainder paid back to Ms Hobbs.
4. [4]
   Ms Hobbs wants to appeal the decision.
5. [5]
   Given this is an appeal from a decision made in the Tribunal’s Minor Civil Dispute jurisdiction, leave to appeal must first be obtained before any appeal proceeds.^[1]
6. [6]
   Leave to appeal will usually only be granted where an appeal is necessary to correct a substantial injustice to the appellant and where there is a reasonable argument that there is an error to be corrected.^[2]
7. [7]
   At the hearing of the Appeal, Mr Bellos sought leave as lessor to be added as a party. He had sold the house after the hearing in January 2018 and the agents no longer acted for him in the matter. I granted his application to be joined as a respondent to the appeal.
8. [8]
   Ms Hobbs also sought leave to adduce oral evidence at the hearing of the application for leave to appeal. She gave no particulars of the evidence proposed to be given however.
9. [9]
   An application for leave to appeal or appeal is not a second opportunity to argue a party’s case. It is usually limited to a consideration of the material that was before the court or tribunal of first instance.
10. [10]
    There are circumstances where fresh evidence will be allowed on appeal as was explained in Clarke v Japan Machines (Aust) Pty Ltd:^[3]

The classic statement of what amounts to “special grounds” for reception of further evidence upon an appeal was approved recently by Lord Bridge in Langdale v. Danby [1982] 3 All E.R. 129 at 137–138. Three conditions must be fulfilled. “First it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial: second, the evidence must be such that, if given, it would probably have an important influence on the result of the case, although it need not be decisive: third, the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible.”^[4]

11. [11]
    Ms Hobbs simply wanted to have another hearing, however. There was no fresh evidence proposed and certainly no suggestion that any evidence intended to be led at appeal was not available for presentation before the learned Adjudicator.
12. [12]
    Accordingly, her application to lead oral evidence was refused. She still had every opportunity however to make submissions as to why the decision of the learned Adjudicator was wrong in accordance with her stated grounds of appeal.
13. [13]
    From her application for leave to appeal, and her elaboration about the grounds of appeal in a subsequent submission filed in the Tribunal, it seems Ms Hobbs challenges the learned Adjudicator’s decision as follows:

Ground 1: The Tribunal erred in awarding compensation for damaged blinds based only on a quotation of cost of repair and where the rental property was sold before hearing without the blinds being repaired.

Ground 2: The Tribunal erred in awarding compensation for damaged blinds where the lessor’s auction agents advised there were no damaged blinds.

Ground 3: The Tribunal erred in awarding compensation for a broken oven door where the oven still worked and the glass broke at night.

Ground 4: The tribunal erred in awarding compensation for damage to the floor in circumstances where there were 2 quotes for repair.

Ground 5: The Tribunal erred in awarding the cost of painting damaged interior walls where the lessor painted all the interior of the house after the tenant vacated and before the house was sold before hearing.

Ground 6: The Tribunal erred in accepting as evidence large photographs depicting damage done to the property at exit and contrasting them with small photographs of the condition of the property at entry.

Grounds 1, 2, 5 and 6

Blinds

14. [14]
    These grounds may all be conveniently dealt with together.
15. [15]
    Ms Hobbs asserted at the hearing of the application for leave to appeal that the lessor’s auction agents told her there was no damage to the blinds. That was not evidence presented to the learned Adjudicator. It is not acceptable to raise it now as fresh evidence for the reasons outlined above.
16. [16]
    Ms Hobbs’ principal complaint is that the house was sold before the hearing date but Mr Bellos never had the blinds repaired or replaced. He only had a quotation for repairs at hearing yet she was ordered to pay the lessor $400. Ms Hobbs submits the lessor was not entitled to anything for the blinds because he suffered no loss.
17. [17]
    The evidence given by the agents at hearing was that the blinds were in good condition at the start of the tenancy but on exit they were badly creased, dirty and there were ‘bite marks’. The quoted cost of repair was $1,193.
18. [18]
    The learned Adjudicator refused the full amount of the claim. He referred to the photographic evidence and oral testimony of the parties. He found that there was damage to the blinds that went beyond reasonable wear and tear. He found there were puncture holes, bending of blades, soiling, and general damage.
19. [19]
    It is clear from his reasons for decision that he considered the exit condition report when making his assessment about the various items of claim. A comparison of the entry condition report and the exit report suggests damage done to the blinds over the period of the tenancy.
20. [20]
    The blinds were not new at the start of the tenancy. Ms Hobbs had noted on the entry condition report that all the vertical chains were missing. She made no reference to existing bite marks however, or that the blinds were dirty or otherwise damaged.
21. [21]
    There was sufficient evidence before the learned Adjudicator to determine as he did that there was damage to the blinds done during the tenancy. The full cost of repair was quoted as $1,193 but the sum granted the lessor was reduced to $400. That was not an unreasonable award in the circumstances, given the evidence about the condition of the blinds as described in the exit condition report compared with the description in the entry condition report and as depicted in photographs.
22. [22]
    The learned Adjudicator stated that despite different sized photographs presented showing the condition of the property at the start of the tenancy (small) as opposed to the end of the tenancy (large), he concluded the blinds had sustained damage during the tenancy. He said he took the different sized photographs into account and regardless of that he found they had suffered general damage, they were soiled, they had puncture holes and blades were bent. The large photographs at exit certainly show damaged blinds. That damage is not noted in the entry condition report. The learned Adjudicator was entitled to reach the conclusion he did on the evidence before him.

House sold

23. [23]
    Ms Hobbs says after she vacated the premises the house was sold. The blinds were sold with the house in an ‘as is’ condition. They were never replaced or repaired but she was ordered to pay for replacement or repair.
24. [24]
    The agents suggested at the hearing of the application for leave to appeal that the sale price had been reduced to take account of the condition of the blinds but a perusal of the transcript of the evidence given at the original hearing shows there was no evidence to that effect given to the learned Adjudicator. It is not to be taken into account now as fresh evidence without an explanation as to why it was not given at hearing.
25. [25]
    Similarly Ms Hobbs says the order that she contribute to the cost of painting was wrong. The lessor, Mr Bellos, painted the whole house throughout anyway before selling it.
26. [26]
    There was no dispute that it was the practice of Mr Bellos to paint the whole house throughout after tenants left. His standard practice was to have the interior painted throughout before a new tenant came in. Admittedly Ms Hobbs had only been in the property for a comparatively short time (12 months) compared to other tenants who were there usually for many years.
27. [27]
    Ms Hobbs submits Mr Bellos was going to paint regardless of any marks or dents she left on the walls. Therefore she submits she should not be responsible for any part of the cost of painting.

Compensation

28. [28]
    The issue concerns the appropriate basis of assessment of compensation for residential tenancy matters in the Tribunal. Accepting there was damage done as at date of vacate, are the circumstances applying as at date of hearing to be taken into account? The learned Adjudicator concluded as follows:

The answer to that is if (sic) the Tribunal must decide on the basis of whether there’s been damage caused, not what the practice of a landlord is in relation to premises…. there is damage and the amount of $350 is allowed for the damage that the Tribunal considered is beyond fair wear and tear.^[5]

29. [29]
    The lessor claims compensation for damage caused as a result of the tenant’s failure to return the property at the end of the tenancy in the same condition as it was in on entry save for fair wear and tear.^[6]
30. [30]
    The learned Adjudicator appears to have concluded that the time for assessment of loss to the lessor was at the time of vacate when the damage to the walls was discovered. That is, he applied the general rule about damages for breach of contract that damages are assessed as at date of breach or when the cause of action arose.
31. [31]
    However, as stated in Johnson v Perez,^[7] a leading authority on date of assessment of damages:

The general rule that damages are assessed as at date of breach or when the cause of action arose has been applied more uniformly in contract than in tort and for good reason. But even in contract cases courts depart from the general rule whenever it is necessary to do so in the interests of justice.^[8]

32. [32]
    I note in that matter Mason CJ goes on to discuss a statutory compensation case^[9] and he makes no distinction between statutory compensation and general actions for breach of contract or tort. Further the learned Justice relied on it to emphasise that the goal is accurate assessment of compensation rather than setting rules in place about date of assessment and following them regardless of the circumstance of the action. He said:

As the cases to which I have referred reveal, the principles governing the assessment of damages do not permit the application of rigid rules based on categories of actions. Instead, the injured party's intentions and the surrounding circumstances must be considered in light of the underlying principles in order to do justice between the parties.^[10]

33. [33]
    In that same case Brennan J said:

The general rule as to the date at which damages are to be assessed is subject to the principle governing the measure of damages. A plaintiff who has suffered damage as a result of a defendant's tort or breach of contract is entitled to such a sum as will, so far as possible, put him in the same position as he would have been in but for the tort or breach of contract: Wenham v. Ella [1972] HCA 43; (1972) 127 CLR 454, at p 466; Todorovic v. Waller [1981] HCA 72; (1981) 150 CLR 402, at pp 412, 442, 463; Livingstone v. Rawyards Coal Company (1880) 5 App Cas 25, at p 39. The time at which damages are assessed must be so fixed as to give effect to the governing principle. In giving effect to that principle, matters occurring after the tort or breach may be excluded from consideration by selecting the date of the tort or breach of contract as the date for assessment; conversely, such matters may be included by selecting the date of the trial as the date for assessment. In either case, it is the governing principle rather than the temporal rule which determines what is to be taken into consideration and what is not.^[11]

34. [34]
    There is no statutory guidance about how and when compensation under s 420 of the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (‘the Act’) is to be assessed. It is important in the matter at hand because if the lessor is to be compensated for the condition of the walls and blinds as at date of vacate, the award of damages by the learned Adjudicator can be supported on the evidence. If, however, the fact that the lessor sold the house with the damaged blinds and he was going to paint the house throughout regardless of anything Ms Hobbs had done marking the walls, then the lessor really suffered no loss or very little loss.
35. [35]
    I note by s 4 of the Act the Act does not operate to reduce the effect of a right or remedy a person would have apart from the Act. But the requirement that a strict limitation period of 6 months after a party becomes aware of a breach of the terms of a tenancy agreement applies to any claim brought^[12] and clearly showcases the social interests aspect of the legislative scheme, protecting tenants who often move frequently and who may not therefore keep good records from being disadvantaged by claims made years after vacate.
36. [36]
    Section 421 specifically requires the Tribunal to consider, amongst other things, expenses incurred by the lessor for work carried out by the lessor for reletting the premises and whether the lessor has met the lessor’s duty under s 362 to mitigate loss. But those provisions do not much more than reiterate the general law position with respect to loss of bargain damages and mitigation of loss.^[13]
37. [37]
    Under the Australian Consumer Law (‘ACL’) there is provision for recovery of loss and damage and compensation for breach of various provisions of the ACL.^[14] In Marks v GIO Aust Holdings Ltd,^[15] which dealt with a breach under the former Trade Practices legislation, the precursor to the ACL, Gaudron J said:

Not only is it misleading to speak of "expectation" loss and "reliance" loss in the context of s 82, but there is no basis for thinking that relief under s 82 is to be confined by analogy either with actions in contract or in tort. With regard to that last matter, all members of the Court are agreed. We differ only in our approach to the question whether, in the circumstances, the appellants suffered or were likely to suffer loss or damage.^[16]

38. [38]
    Similarly I conclude it is not appropriate to attempt to align or restrict the right of a party to a tenancy agreement to compensation under the Act to an award of damages by an analogy to the general law applying to damages for breach of contract or tort. Rather it is appropriate in an assessment of a claim for compensation under s 420 to consider ‘the injured party's intentions and the surrounding circumstances… in light of the underlying principles in order to do justice between the parties.’^[17]
39. [39]
    In the matter at hand the surrounding circumstances that should be considered include the sale of the house, and the actions of the lessor taken in pursuit of that purpose. Looked at in that light, the lessor sold the house without suffering any expense repairing the blinds beforehand. The lessor therefore suffered no loss over the blinds.
40. [40]
    The matter is slightly different with respect to the painting but again the circumstances of the sale and preparation of the house for that event should be taken into account. It was not unreasonable for the learned Adjudicator to conclude, as he apparently did, that the lessor would have had all the interior of the house painted after Ms Hobbs left regardless of damage to the painted walls, perhaps not based on his standard practice after a tenant vacated but because he was selling the house and wished to present it to best effect.
41. [41]
    Any loss suffered by the lessor in respect of marks on walls attributable to Ms Hobbs was therefore limited to that extra cost of making good the scratches dents and marks over the cost of the entire paint job without having to fix any the tenant damage.
42. [42]
    There was no evidence about that presented to the learned Adjudicator however. There was only a quote about patching and painting the areas of tenant damage as an entirely separate job expense to that of painting throughout. 
43. [43]
    The learned Adjudicator concluded that the lessor’s repaint throughout after Ms Hobbs left was irrelevant to the issue of compensable loss. On this point I find the learned Adjudicator erred. It was a relevant issue in respect of assessment of the lessor’s loss.
44. [44]
    The learned Adjudicator made an error of law in respect of the basis of assessment of compensation for both the blinds and the painting.

Ground 3:

The Tribunal erred in awarding compensation for a broken oven door where the oven still worked and the glass broke at night.

45. [45]
    The learned Adjudicator awarded the lessor $300 for the broken oven door. The door could not be replaced and the lessor purchased a new oven. The lessor’s claim was initially for the full cost of a new oven, $650. The oven was 13 years old.
46. [46]
    The learned Adjudicator concluded Ms Hobbs should contribute an amount equal to the estimated cost of replacing an oven door. He estimated $300. It seems fairly clear that an oven without a door cannot function properly.
47. [47]
    The assessment of damages in cases such as this, with old items requiring an assessment of depreciated value, is sometimes difficult. Different decision makers may conclude different awards should apply. The learned Adjudicator noted that the lessor’s claim for the cost of a new oven was not appropriate and estimated that had a replacement door been available its cost would probably be approximately $300.
48. [48]
    In an email dated 22 September 2017 forwarded on behalf of the tenant to the agents an offer was made that each party should contribute half the cost of a new oven which was quoted at $650. In those circumstances I am unable to conclude that the Adjudicator’s award was outside the range of reasonable assessment. I find no error in the learned Adjudicator’s award in respect of the oven.

Ground 4:

The tribunal erred in awarding compensation for damage to the floor in circumstances where there were 2 quotes for repair.

49. [49]
    This was not a ground of complaint raised before the learned Adjudicator. The objection to the claim stated in the answer to the lessor’s counter application was that any scratches were simply fair wear and tear.
50. [50]
    It is too late now to raise the matter at the hearing of an application for leave to appeal.

Conclusion

51. [51]
    The learned Adjudicator made an error of law about the assessment of compensation in respect of the blinds and painting. Leave to appeal should be given and the appeal allowed in so far as it relates to those two items.
52. [52]
    Given the error is error of law, by s 146 of the QCAT Act one possible method of disposition of the appeal is to substitute the Appeal Tribunal’s decision for the decision of the Tribunal below. That is the appropriate course to follow here.
53. [53]
    Adopting what I have said above in considering leave to appeal about the relevant circumstances for consideration in determining the lessor’s loss, there was no evidence of any lessor loss referrable to painting or repair or replacement of blinds. Accordingly Mr Bellos should not have been awarded $750 as compensation for those 2 items.
54. [54]
    That amount of $750 paid Mr Bellos from the bond should be refunded to Ms Hobbs and the order of the Appeal Tribunal is to that effect.