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Routley v Philip QCATA 119
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Routley v Philip & Anor  QCATA 119
ORIGINATING APPLICATION NO/S:
23 July 2019
On the papers
APPEAL – LEAVE TO APPEAL – EXTENSION OF TIME FOR FILING APPEAL – MINOR CIVIL DISPUTE – RESIDENTIAL TENANCIES – PERIODIC LEASE – NOTICE TO LEAVE – COMPENSATION – where the applicant as lessor and respondents as tenants entered into a fixed term lease – where tenancy was terminated by compliance with notice to leave – where the applicant filed QCAT compensation proceedings for breach including unpaid rent – where part compensation awarded – where claim for post termination rent refused – whether the orders in issue should be set aside.
Queensland Civil and Administrative Tribunal Act 2009 (Qld) ss 13, 32
Residential Tenancies and Rooming Accommodation Act 2008 (Qld) ss 4, 173, 277, 362, 417(2), 419, 420, 421
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
- The question is whether tenants are liable to compensate for expectation loss where a fixed term tenancy was ended early by the lessor for breach. As the answer is of general importance leave is granted.
- The tenancy was for a fixed term of six (6) months ending 3 July 2018 at rent of $275 weekly in advance.
- Special condition 48 of the agreement provided for early termination by the tenant a follows:
If the tenancy is breached before the end of the tenancy specified in Item 6 despite other provisions of this agreement the lessor may claim from the tenant –
(a) The rent and services charges until the lessor relets the premises … ; and
(b) The reasonable costs (including advertising …) or reletting … (sections 173(2) and 420).
- A Form 11 issued on 29 January 2018 for rent arrears. Notice to leave for unremedied breach was given on 6 February 2018. The tenant vacated on 13 February 2018. The premises were relet on 8 June 2018. The compensation application was filed on 26 September 2018.
- Section 419(2), (4) Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (RTRA Act) allows either party to a tenancy agreement to apply for a tribunal order about an alleged breach of a term of a residential tenancy agreement including after it has ended. The orders about breach of agreements the tribunal may make are listed in s 420 RTRA Act. They include an order for the payment of money and for compensation.
- Where there is no inconsistency the rights and remedies given under the RTRA Act are in addition to not instead of those recognised at common law or agreed conditions of the tenancy but otherwise they prevail.
- In making a compensation order in favour of a lessor the tribunal is exercising a structured discretion and must have regard to the matters in s 421(1)(a), (d) RTRA Act including reasonable advertising expenses and reasonable reletting costs plus the rent due but not paid for the period starting when the agreement is terminated because of the tenant’s action and ending the earlier of when the tenancy expires or when the premises are relet.
- Also, s 362 RTRA Act disentitles a lessor from receiving compensation for any loss or expense that could have been but was not avoided by taking reasonable steps to mitigate losses or expences incurred because of abandonment of the premises or another act or omission of the tenant.
- Section 419(3) RTRA Act mandates the making of applications about breach of agreement within six (6) months after the lessor becomes aware of the breach.
- However, under s 417(2) the relevant date for calculating the limitation period under s 419(3) RTRA Act is when a dispute resolution request is made to the Residential Tenancy Authority.
- As a Form 16 was lodged by the appellant on 28 July 2018 the deadline for the breach on 29 January 2018 was met with a day to spare.
- The tribunal awarded the lessor compensation for unpaid rent to the date of termination plus reasonable reletting fees but refused $4,478.57 for loss of expected rent between the handover day and reletting date.
- The agent contends that the tribunal order is affected by legal error and that leave is needed to fix it on appeal to avoid substantial injustice because as the lessor the appellant was legally entitled to loss of bargain damages under both the terms of the agreement and general law principles preserved by s 4 RTRA Act.
Compensation for lost rent
- A fixed term tenancy binds the parties to its terms from the starting to the end date unless it is terminated earlier in one of the ways mentioned in s 277 RTRA Act and cl 36 of the standard form of agreement.
- Compliance with a valid notice to leave for unremedied breach is one of those ways. It has the effect of discharging both parties from further performance of the conditions of the tenancy so they can move on but does not relieve the terminating party of liability for relatable losses.
- Not every breach of a residential tenancy entitles the lessor to terminate as well as claim compensation for the amount equal to the rent payable for the balance of the term or reletting (lost rent). It depends on the nature and seriousness of the breach. For anticipatory breach non-compliance with a fundamental or essential obligation amounting to total renunciation of the tenant’s future performance of all the terms of the tenancy agreement is required.
- The tribunal found against the applicant on the grounds that the lessor terminated the agreement as the price for reletting to a more suitable tenant and forfeited any compensation claim he might have otherwise had.
- It is equally arguable that the tenancy was really terminated by the respondents’ breach because if they had met their rent obligation the appellant would not have had any ground to terminate but even on that construction special condition 48(a) does not necessarily support the claim for the rent still payable under the agreement because it arguably offends the provisions of s 173(1) RTRA Act which voids a term of a residential tenancy agreement to the extent that it purports to impose automatic liability on a tenant for any breach regardless of its nature or significance.
- The proviso in s 173(2) RTRA Act saves a term of a fixed term agreement from invalidity where it provides that, if the tenant terminates the agreement other than in a way permitted under the RTRA Act, the tenant is liable to pay the reasonable costs incurred by the lessor in reletting the premises but it doesn’t apply here because on the tribunal finding the agreement was ended early by the appellant not the respondents or, alternatively, whoever is responsible for termination of the tenancy it was ended in a way permitted under the RTRA Act i.e. by compliance with a valid notice to leave. In any case it only relates to the reasonable costs incurred by the lessor in reletting the premises and compensation for that head of loss was awarded under special condition 48(b).
- Even if special condition 48 is not voided by s 173(1) RTRA Act the tribunal had a residual discretion not to enforce it in this case under s 420(1) RTRA Act and on fairness and equitable grounds under s 13 QCAT Act and there is no assertion that it miscarried.
- The appeal therefore fails.
- Published Case Name:
Routley v Philip & Anor
- Shortened Case Name:
Routley v Philip
 QCATA 119
23 Jul 2019