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Property 1301 Pty Ltd v Traynor QCATA 50
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Property 1301 Pty Ltd t/as Rental Trends v Traynor  QCATA 50
PROPERTY 1301 PTY LTD T/AS RENTAL TRENDS
ORIGINATING APPLICATION NO/S:
MCDT1237 of 2017
26 April 2019
On the papers
Member Ann Fitzpatrick
The respondent Carmen Traynor pay to the appellant Property 1301 Pty Ltd t/as Rental Trends the sum of $1,891.14 within 28 days of the date of this decision
APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – ERROR OF LAW – where appeal from residential tenancy matter in QCAT’s minor civil disputes jurisdiction – where tenant gave informal notice to leave before the expiration of fixed term tenancy – whether agreement to end tenancy – breach of tenancy agreement – whether tenant liable to compensate the lessor until premises relet.
Pickering v McArthur  QCA 294
Professional Atherton Real Estate v Newton and Bond  QCATA 117
Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105
Ann Ellen Absolon, Principal, Property 1301 t/as Rental Trends
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 respondent Ms Traynor rented a unit at 2/475 Vulture Street, Wooloongabba, pursuant to a written General Tenancy Agreement dated 6 October 2016, in accordance with the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (RTRA Act).
- The appellant is agent for the lessor.
- The lease was for a fixed term, expressed to end on 27 June 2017. On 18 February 2017, Ms Traynor orally advised the agent of her intention to terminate the lease earlier than its end date. Ms Traynor confirmed early termination by email on 23 February 2017. She gave no reason for the early termination, merely stating: ‘This is to notify you that I will be vacating the premises on the 27/3/2017 as you are aware. Would you kindly send through the paper work so we can get this underway.’
- The agent responded by email dated 23 February 2017:
Thank you for your advice that you are vacating the property 27.03.17. In this instance you are terminating the tenancy early and as such you will be required to pay all costs associated with doing so. Those costs are the reletting fee and the advertising fee that normally the owner would incur but these become your responsibility as you are terminating the agreement…. please bear in mind during this process that it is all parties that must mitigate the owners loss. So it is expected that you will contribute towards showing the property and advertising the property also… I hope that the following information assist you with vacating… All keys are to be returned to our office by 5pm on the last day of the tenancy. If keys are not returned by that time the owner reserves his option to continue to charge rent until the keys are returned…
- An invoice for a reletting fee and advertising fee was rendered to Ms Traynor in the sum of $511.50. On 25 February 2017 Ms Traynor enquired: ‘Is this the total amount in fees I need to pay?’ By return email the agent responded: ‘Yes. Our email explained all of the process’.
- The reletting fee and advertising fee were paid on 28 February 2017.
- On 22 March 2017 the agent sent an invoice to Ms Traynor claiming rent for a period of 55 days from 28 March 2017 to 22 May 2017 (the date a new tenant was to take over the property) in an amount of $2,920.00 and a further $10.00 per week for a period of 35 days from 23 May 2017 to the last day of the Ms Traynor’s tenancy on 27 June 2017. The last amount reflected the difference in rent between that paid by the new tenant and the rent Ms Traynor was paying.
- On 23 March 2017 Ms Traynor complained that she had compensated the lessor for early termination by payment of the reletting and advertising fees and that she should not be responsible for rent until a new tenant moves into the property.
- On 23 March 2017 the agent emailed Ms Traynor stating that neither the agent nor the lessor had released Ms Traynor from her contractual obligation to pay rent and that she had merely been advised of the agent’s costs to assist in locating a new tenant. Ms Traynor was informed that if the owner’s compensation for early termination, being the claimed rental was not paid then proceedings would be taken against her for recovery.
- Ms Traynor vacated the premises on 27 March 2017.
- The property was advertised and was opened for inspection.
- The property was re-let as from 22 May 2017 at a lesser rent.
- Ms Traynor applied to the Queensland Civil and Administrative Tribunal for orders for:
- (a)return of the bond in the sum of $1,460;
- (b)return of $730 over payment of two weeks’ rent;
- (c)waiver of the demand for compensation for lost rent; and
- (d)re-imbursement of the QCAT filing fee.
- The appellant filed a counter-application seeking orders for:
- (a)release of the bond to be contributed to compensation owing due to early termination;
- (b)compensation for lost rental calculated for the period 11 April 2017 to 22 May 2017 in the sum of $2,137.74 (41 days at $52.14 per day). The claim takes into account two weeks rent overpaid by Ms Traynor in the sum of $730; and
- (c)payment of an invoice in the sum of $264 inclusive of GST for the cost of repairs to the unit.
- The claims were heard in the Tribunal’s minor civil disputes jurisdiction on 30 August 2017.
- Oral reasons for the Tribunal’s decision were given which included:
- (a)the premises were vacant for 55 days;
- (b)evidence from the agent was accepted that at the time it was difficult to let properties;
- (c)both parties, but especially the real estate agent, have a duty to mitigate loss and to find a tenant as soon and as quickly as possible. There is no particular requirement under the legislation for the tenant to pay lost rent;
- (d)there is a requirement to pay a break-lease fee, and that is a penalty for breaking the lease;
- (e)there is an expectation or a requirement for advertising and there also is a legislative requirement for a two-week rental penalty for somebody who breaks the lease;
- (f)in this case the agency already has the sum of $730.00, which is two weeks’ rent;
- (g)beyond that there is no legislative obligation for a tenant to pay extra rent until the real estate agency finds a new tenant;
- (h)the agency had five and a half weeks’ notice which was approximately 40 days.
- (i)there is not a great deal of difference between the notice given and the 50 days, (on the evidence) which it takes for the average property to be relet.
- (j)the applicant thought, probably through poor communication, that $511.00 was the limit of the penalty for early termination;
- (k)it is up to the Tribunal to determine what is reasonable.
- The Tribunal decided:
- (a)Mrs Traynor has paid the penalty for breaking the contract and has paid the two-week statutory rent for breaking the lease.
- (b)The repairs are reasonable and $264 should be awarded to the agents.
- (c)The Residential Tenancies Authority should distribute the bond in the following way:
- $1196.00 to Ms Traynor; and
- $264.00 to the agency.
Leave to appeal and appeal grounds
- The appellant has sought leave to appeal and appealed on the following grounds:
- (a)The decision was substantially unjust.
- (b)The Notice of Unresolved Dispute was not included in the application and should have been required to be produced to the Tribunal.
- (c)The applicant, Ms Traynor, did not put Annexure A to the General Tenancy Agreement before the Tribunal, which provides that: ‘In the event that the tenancy (sic) vacates the property prior to the expiration date of the Tenancy Agreement (Break Lease) the Tenant acknowledges responsibility for payment of rent until the commencement of a new tenancy or expiry of the tenancy agreement, advertising costs associated with reletting and a letting fee of one weeks rent plus GST’.
- (d)The Tribunal member erred because the Residential Tenancies and Rooming Accommodation Act 2008 provides that where a Notice to Leave is given without ground for a fixed term agreement then handover date must be 14 days after notice is given or the day the term of the agreement ends. The section does not prevent a tenant from giving a Notice to Leave before the end of the fixed term agreement.
- (e)The applicant’s claim of hardship during the hearing was not a ground upon which the tenancy was terminated. The Tribunal Member was influenced by this evidence and the lessor was disadvantaged.
- (f)The lessor is out of pocket by $2,137.14.
- (g)The Tribunal Member was neither satisfied or unsatisfied that reasonable steps had been taken to re-tenant the property. The Member said it was a “grey area”.
- (h)There is no reason why the tenant should not be ordered to pay damages occasioned by early termination, when the Member could not determine whether the time taken to re-tenant the property was satisfactory.
- (i)The Tribunal Member referred to the break lease and advertising fee as a penalty and took this into consideration as compensation stating that the Member felt the applicant had been penalised enough after the hearing closed.
- The respondent simply says that the decision is not unjust.
- By s 142(3)(a)(i) of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act) an appeal from a decision made in the Tribunal’s minor civil dispute jurisdiction, may only be made with leave of the Appeal Tribunal. Leave to appeal will usually only be granted where an appeal is necessary to correct a substantial injustice and where there is a reasonable argument that there is an error to be corrected.
- This appeal raises mixed questions of law and fact. By s 147 of the QCAT Act the appeal must be decided by way of rehearing, with or without the hearing of additional evidence as decided by the appeal tribunal. The tribunal may confirm or amend the decision or set aside the decision and substitute its own decision.
- The grounds of appeal are considered as follows.
- (a)The Notice of Unresolved Dispute was not included in the application and the Tribunal Member erred by not requesting this document be produced by the applicant.
The Notice formed part of the material before the Tribunal as it was filed by the appellant. Nothing turns on this ground of appeal.
- (b)The Tribunal did not take into account Annexure A to the tenancy agreement which provided for payment of rent until the premises were relet and payment of other fees, in the event of early termination.
I note that Annexure A was not attached to either Ms Traynor or the appellant’s copy of the tenancy agreement filed in the Tribunal. Although the words “Annexure A” are referred to in the tenancy agreement in the place provided for “special terms”, it was not attached to any copy of the tenancy agreement in evidence before the Tribunal. The appellant did not make reference to the terms of the annexure in evidence or in submissions to the Tribunal. If the annexure contained the term described by the appellant, the document was one which should have been put before the Tribunal by the appellant.
There is insufficient evidence to find that the term described by the appellant formed part of the general tenancy agreement.
Accordingly, there is no express contractual entitlement to payment of rent until the premises were relet and payment of other fees in the event of early termination. Any entitlement to compensation which might encompass these items will rely on an entitlement being established on the facts as a result of breach of the agreement and after consideration of sections 362, 420 and 421 of the RTRA Act.
- (c)The Tribunal misconstrued the RTRA Act in relation to notice of a proposed handover date which in the case of a fixed term lease must be the later of 14 days after a notice to terminate is given or the day the term of the agreement ends.
It is not entirely clear what point the appellant is seeking to make arising from this ground of appeal. However, it may be a reference to the Tribunal appearing to confuse a minimum 14-day notice period of termination of a fixed term tenancy with what was described in the decision as an obligation to pay a two-week rental penalty. The RTRA Act does not require payment of two weeks rent as a penalty for early termination. The Tribunal was in error in making that finding. As a result, the Tribunal was mistaken in characterising overpaid rent as a “two-week statutory rent for breaking the lease”.
- (d)The Tribunal took into account an irrelevant consideration, namely hardship suffered by Ms Traynor.
Ms Traynor raised hardship in her material before the Tribunal as a reason for early termination of the tenancy agreement. She did not however make an application to the Tribunal to terminate the tenancy on that ground, nor was that considered by the Tribunal. I do not think that hardship bore on the reasons of the Tribunal in making its order. Hardship is not mentioned in the reasons for the decision. This ground of appeal fails.
- (e)The Member did not express a view on whether reasonable steps had been taken to re-tenant the property and did not determine an amount of compensation for the lessor.
I take this ground of appeal to be a complaint that the Tribunal failed to take into account the matters set out in the RTRA Act - sections 362 (Duty to mitigate loss or expense), 420 (Orders about breach of agreements) and 421 (Matters to which tribunal must have regard for orders for compensation).
Before the Tribunal could consider a claim for compensation by the lessor for early termination of the tenancy agreement it was necessary for the Tribunal to make a finding as to whether the tenancy had been brought to an end in the terms of the RTRA Act. It was also necessary to decide if Ms Traynor was in breach of the tenancy agreement so as to give rise to an entitlement on the part of the lessor to compensation for loss or damage. The Tribunal was in error in failing to do so. If the Tribunal had found a breach of the tenancy agreement, it was obliged to consider unpaid rent from the date of termination of the tenancy agreement to the end of the fixed term or the date the premises were relet. The Tribunal misdirected itself by dismissing the claim for unpaid rent on the basis that there is no legislative requirement for a tenant to pay rent until a new tenant is found. The Tribunal should have considered unpaid rent when determining the compensation claim. The Tribunal was in error by failing to consider the terms of s 421 of the RTRA and to apply it to the facts.
As to whether the Tribunal gave proper consideration to the time it should reasonably take to relet the premises and the impact that may have on the lessor’s claim for compensation, I note that the Tribunal appears to have accepted the appellant’s evidence as to the steps it took to relet the premises and the average time it might take to relet such premises. However, the Tribunal ignored those factors and misdirected itself by taking into account amounts wrongly described as penalties required by the Act, namely the payment of a two-week rental penalty for early termination and payment of advertising and reletting fees which the Tribunal described as penalties. The Tribunal was in error by considering the question of compensation without reference to s 421 and by mis-stating the requirements of the Act in terms of penalties for early termination.
- (f)The Tribunal misconstrued the RTRA Act by referring to a requirement to pay a break lease fee and advertising fees as a penalty and taking that into account in considering compensation.
The RTRA Act does not prescribe a break lease fee and advertising fees as a penalty. The Tribunal was in error in so describing those fees. The fees are however proper matters for consideration in relation to making an order for compensation and to the extent that they were taken into account there has not been an error.
- (g)The Tribunal took into account an irrelevant consideration, namely that Ms Traynor had been penalised enough.
The appellant suggests that a comment was made by the Tribunal after proceedings concluded to the effect that Ms Traynor had been penalised enough. The transcript does not record any such comment. I am unable to find that the comment was made. In any event such an observation does not appear in the reasons given before making the award. This assertion fails as a ground of appeal.
To the extent that the appellant’s ground of appeal is that the Tribunal misdirected itself by concluding that that the wrongly named statutory penalties paid by Ms Traynor were sufficient to compensate the lessor, then this ground of appeal succeeds for the reasons set out in relation to the previous grounds.
- It is apparent that the Tribunal did not consider the following matters. The Tribunal was in error in failing to do so. In particular a finding as to whether the tenancy has been bought to an end within the terms of s 277 of the RTRA Act is fundamental to determining the jurisdiction of the Tribunal. There is sufficient evidence before me to address these issues which I will do as part of a rehearing in order to substitute the Appeal Tribunal’s decision for that of the Tribunal below.
- (a)Did the tenancy agreement end in accordance with s 277 of the RTRA Act?
A tenancy agreement can only end by one of the means set out in s 277 of the RTRA Act.
I find that the tenancy agreement ended in accordance with s 277(2) of the RTRA Act by means of a written agreement of the lessor and tenant. The agreement is set out in the email exchange of 23 February 2017 between Ms Traynor and the agent. The section does not require any formality in the agreement, merely that it be in writing.
The email exchange reveals agreement on the following matters:
- (i)Ms Traynor will vacate the premises on 27 March 2017;
- (ii)Ms Traynor must pay a reletting and advertising fee and make the premises available for inspection by future tenants;
- (iii)the agent will attempt to find another tenant;
- (iv)there will be an early termination of the tenancy agreement.
The parties have not expressly nominated a date for termination of the tenancy agreement. By construing the 23 March 2017 email exchange between the parties, I find that the termination date was intended to be 27 March 2017. The 23 March 2017 email from the appellant accepts that Ms Traynor would vacate on that date. The appellant refers to a continuing obligation to pay rent if the keys are not returned on that date, suggesting that the obligation to pay rent ceases if the keys are returned. Consistent with the email exchange Ms Traynor handed vacant possession of the premises to the appellant on 27 March 2017.
The subsequent communications between Ms Traynor and the appellant demonstrates that there was no agreement between the parties as to what rent or compensation for early termination might be payable by Ms Traynor. I do not think that affects the agreement between the parties to bring the tenancy agreement to an end.
- (b)Is Ms Traynor liable to pay rent from 27 March 2017 to the date of reletting?
Apart from the matters agreed set out earlier in this decision, there is a dispute in relation to what Ms Traynor may have to pay as a result of early termination of the tenancy agreement. Ms Traynor’s evidence is that the appellant told her in its email of 25 February 2017 that the reletting and advertising fees were the only fees that she needed to pay and that their email of 23 February 2017 “explained all of the process”.
The appellant says that it was never the lessor’s intention to release Ms Traynor from any obligation to compensate the lessor for lost rent and that was made clear in a further email of 23 March 2017. The appellant refers to the lessor’s statutory entitlement to compensation, which could only be calculated once the premises were relet and which it says was not addressed in the 23 February 2017 email exchange.
Until the 23 March 2017 email from the agent, the terms of the agreement were unclear. I accept that Ms Traynor was misled as to the extent of her liability upon termination of the lease. Nevertheless, there was no express release of liability to pay rent or compensation as a result of early termination of the lease and on 23 March 2017 the appellant made the lessor’s position very clear that the lessor did not release Ms Traynor from her “contractual responsibilities” and that the lessor maintained a claim for compensation.
Ms Traynor specifically sought relief from liability to pay the sum of $2,920.00 demanded from her for rent to the date of reletting and lost rent to the end of the fixed term. That claim was reduced at the hearing to an amount of $2,137.74. Ms Traynor relied on the representation in the 25 February 2017 email. The Tribunal did not address the claim. The Tribunal was in error in failing to do so. Ms Traynor does not articulate a claim based on an estoppel but that is the effect of the relief sought by her. I do not think that Ms Traynor is entitled to any relief based on what she asserts was represented to her in the 25 February 2017 email. That is because once Ms Traynor knew the lessor’s true position, she was no worse off than she had been upon advising the agent that she intended to break the lease. In other words, because she was informed of the consequences of early termination before the tenancy agreement came to an end, she had not changed her position to her detriment.
As at 23 March 2017 Ms Traynor could have remained in the premises or applied to the Tribunal under s 295 of the RTRA Act for an order terminating the tenancy because of excessive hardship. If the Tribunal was satisfied that the grounds had been established, it may have ordered that the tenancy end relieving Ms Traynor of liability to pay compensation. Ms Traynor did not do so despite there being a possible basis for such a claim. I note Ms Traynor made submissions to the Tribunal that she was unable to afford rent because her Newstart allowance ended when she stopped her studies.
Otherwise, subject to the discussion later in this decision, Ms Traynor remained liable for rent until the tenancy agreement was terminated and for compensation for early termination thereafter.
I find that Ms Traynor is not relieved of liability to pay compensation for early termination as a result of the representation in the 25 February 2017 email.
I have considered whether the agreement to end the tenancy amounts to a surrender of the lease as at 27 March 2017 which brings to an end claims of the lessor against the tenant from the date of the surrender?
If it was not for the email of 23 March 2017 clarifying the lessor’s position, it may have been possible to find that the parties had agreed to the surrender of the lease on 27 March 2017.
However, it was not the lessor’s intention to relieve Ms Traynor of any liability to compensate the lessor for unpaid rent until another tenant had been found. The agent spelled that out in the 23 March 2017 email. I find that there has been no surrender of the lease.
The lessor is entitled to recover outstanding rent or compensation for early termination of the tenancy agreement provided the provisions of the RTRA Act are met and the Tribunal has power to make the order.
By s 362 of the RTRA Act, before the lessor can receive compensation for any loss the lessor must take all reasonable steps to mitigate loss caused by an act of the tenant. The relevant act of the tenant in this case is early termination of the tenancy agreement. I am satisfied on the evidence that the lessor took steps to find another tenant by reasonable means including advertising and opening the premises for inspection. I find that the lessor has mitigated any loss by reletting the premises as soon as possible.
I find that the appellant’s counter-application for compensation for early termination of the tenancy agreement is a claim which falls within s 419 of the RTRA Act as a claim that there has been a breach of the tenancy agreement. The relevant breach is Ms Traynor’s repudiation of the tenancy agreement by evincing an intention not to be bound by the agreement past 27March 2017 in circumstances where she had entered into a fixed term tenancy agreement until 27 June 2017.
By s 420 of the RTRA Act the Tribunal may make an order for payment of compensation or an order for the payment of money if an application about breach of a residential tenancy agreement is made to a tribunal. The matters to which the Tribunal must have regard in making an order for compensation are set out in s 421 of the RTRA Act.
Section 421 of the RTRA Act provides that the Tribunal can compensate the lessor for rent required to be paid but not paid for the period from termination until the end of the fixed term or until the premises are relet.
Given my earlier finding that the date of termination of the tenancy agreement is 27 March 2017, I find by applying s 421 of the RTRA Act that Ms Traynor should compensate the lessor for unpaid rent from 27 March 2017 to 22 May 2017 in the sum claimed at the hearing in an amount of $2,137.74 (which takes into account overpaid rent). The appellant does not appear to have maintained a claim for the difference in rental amounts.
Under s 421 of the RTRA Act I am required to consider advertising expenses, which I note have been paid by Ms Traynor. In relation to other expenses, I note Ms Traynor also paid a reletting fee. Both were paid by agreement. Ms Traynor was ordered to pay $246 for repair work, I consider that to be fair. That sum has been paid from the bond to the lessor.
Conclusion and Orders
- For the reasons given, I make orders granting leave to appeal. The appeal is allowed because of errors of mixed fact and law referred to in these reasons.
- On a rehearing, because the rental bond has been paid out to the parties pursuant to the Tribunal’s order made on 30 August 2017, the appropriate order is to require Mrs Traynor to pay to the lessor through its agent an additional sum of $1,891.14 for the shortfall in rent claim, being the sum of $2,137.14 less $246 for repairs already paid. The sum should be paid within 28 days of the date of this decision.
 Clause 43 Standard Terms General Tenancy Agreement – agent may stand in the lessor’s place in any application to a tribunal.
 Pickering v McArthur  QCA 294 at .
 Sections 327 and 331(2)(g) of the Residential Tenancies and Rooming Accommodation Act 2008 (Qld).
 Professional Atherton Real Estate v Newton and Bond  QCATA 117 at .
 Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105 at 133.
- Published Case Name:
Property 1301 Pty Ltd t/as Rental Trends v Carmen Traynor
- Shortened Case Name:
Property 1301 Pty Ltd v Traynor
 QCATA 50
Member Ann Fitzpatrick
26 Apr 2019