Horsley v Davis[2021] QCATA 124

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

1. [1]
   The parties entered into a residential tenancy agreement for a house in Maryborough in 2016.  The appellants were the tenants.  Rent was $310 per week, not increased during the tenancy.  Under the agreement the tenants were to pay the water consumption charges for the premises.  The respondents say that from time to time rent and water contributions were not kept up to date, and as at October 2020 there was over $5,000 owing to them by the tenants.  They had issued notices to remedy breach in Form 11 which had not resolved the situation, and on 23 October 2020 served a notice to leave in Form 12 at the premises. 
2. [2]
   On 4 November 2020 the respondents filed in Maryborough an application for a minor civil dispute – residential tenancy dispute - seeking a warrant of possession on the ground of the tenants’ failure to comply with the notice to leave.  The application was heard by a Member^[1] at Maryborough on 14 December 2020, and a termination order and an order for a warrant of possession to issue were made.  The following day, the appellants filed at Maryborough an Application for Leave to Appeal or Appeal from the decision of 14 December, and an Application to stay the decision.  An interim order was made on 6 January 2021 to suspend the operation of the termination order and warrant, and on 1 February 2021 Allen DCJ, the Deputy President of the Tribunal, stayed the decision of 14 December pending the hearing and determination of the application of leave to appeal, and any appeal. 
3. [3]
   On 14 June 2021 an application was filed by the respondents seeking to have the application for leave to appeal struck out, on the ground that the appellants had failed to pay rent during the period of the stay pending the appeal, as they had promised.  That application is now before me, together with the Application for leave to appeal.

Applicable Legislation

4. [4]
   The Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (“the Act”) applies to this tenancy. By s 280 of the Act, if the lessor believes on reasonable grounds that the rent payable under the agreement has remained unpaid in breach of the agreement for at least 7 days, or the tenant has breached another term of the agreement and the breach has not been remedied, the lessor may give a notice to the tenant requiring the tenant to remedy the breach within the allowed remedy period.  By s 325, the notice to remedy breach must be in the approved form, must be signed by or for the party giving the notice, must include particulars of the breach and must state the day by which the party to whom the notice is directed is required to remedy the breach.  By s 328, the allowed remedy period for a notice to remedy breach must not end earlier than seven days after the notice is given. 
5. [5]
   By the Act s 281, the lessor may give a notice to leave the premises to the tenant because the tenant has failed to comply, within the allowed remedy period, with a notice to remedy breach given to the tenant by the lessor.  It follows from the terms of s 281 that a notice to leave in reliance on a failure to comply with a notice to remedy breach cannot be issued until after the allowed remedy period has expired.  The length of notice to leave required to be given varies depending on the ground on which it is issued: s 329(1). 

Circumstances

6. [6]
   The respondents, in their application to the Tribunal, identified their reasons for seeking the warrant as a failure to remedy any Form 11 breach notices, and a refusal to pay rent arrears and arrears for water consumption.  On page 8 they identified only the notice to remedy breach issued on 19 October 2020, although they attached as well copies of such notices issued on 16 August 2019, 19 March 2019 and 6 September 2017.^[2]  The notice issued on 19 October 2020 identified the details of the breach as “unpaid rent and water usage $7,125.62.”  It gave 2 April 2020 as the date rent was paid to, and the date the breach must be remedied by as 2 November 2020.^[3] 
7. [7]
   The application to the Tribunal relied on the notice to leave in Form 12 issued on 23 October 2020.  This stated the grounds of the notice as refusal to pay rent, and said that remedy breach notices had been ignored.  This notice was not issued in compliance with the requirements of s 281, so far as it relied on the notice to remedy breach issued on 19 October 2020, because the allowed remedy period had not expired when it was issued.  Assuming the notice to remedy breach of 19 October 2020 was otherwise valid, it could not be a valid basis for the notice to leave. 
8. [8]
   The application also relied on the earlier notices to remedy breach, but there are further difficulties.  The notice of 19 October 2020 stated that the rent was paid to 2 April 2020, well after the previous notice to remedy breach, issued 16 August 2019, which claimed an amount for unpaid rent of $4,650.  That notice said that rent was paid to 17 May 2019.  The rent record attached to the application to the Tribunal shows that for the balance of 2019 the tenants were paying the rent regularly and $100 per fortnight off the arrears.  The payments became less regular in 2020, but from May 2020 payments were being made, generally of the rent amount.  By the Act s 96 a payment for “rent” can only be applied as a rent payment, but a lessor is free to apply a rent payment to overdue rent rather than current rent, and a payment not applied to a specific debt is treated as a payment of the oldest debt.^[4] 
9. [9]
   It follows that by the time the notice to leave was issued the failures to pay rent relied on in the earlier notices to remedy breach had been remedied.  That does not in itself invalidate the notice if the outstanding rent was not paid within the allowed remedy period, since acceptance of rent does not operate as a waiver of the tenant’s breach – the Act s 278 – but in these circumstances the Tribunal may exercise its discretion not to terminate the agreement and issue a warrant: the Act s 337.  Apart from that, delay between the notice to remedy breach and the notice to leave may amount to a waiver of the right to rely on the former notice, and that may also occur if there is an agreement between the parties for the tenant to be given time to pay. 
10. [10]
    I might add that the notice to leave gave a handover day seven days after the notice was issued.  So far as it relied on a failure to pay rent, that seven day period complied with the requirement of s 329(1)(a).  The notice to remedy breach also referred to a failure to pay for water consumption.  Payments for water consumption are regarded as a “service charge” (the Act s 164) and this is not within the definition of Rent in Schedule 2 to the Act, so this is properly regarded as a breach of a term of the agreement other than to pay rent, for which the period specified by s 329(1)(b) is fourteen days.  Accordingly the notice to leave could only be supported as valid if there was a failure to comply with a notice to remedy breach so far as it related to non-payment of rent.^[5] 

Proceeding at first instance

11. [11]
    At the hearing in Maryborough the parties were not legally represented.  The appellants were represented by Mr Horsley, who said that there were no arrears of rent, and rent had been paid up to next Thursday: p 1-3.  He conceded that the water charge had not been paid.  Mr Davis said^[6] that there was then ten weeks rent outstanding, $3,100, with the balance ($2,504.46) being unpaid water charges: p 1-5.  Mr Horsley said that they were seeking a reasonable time to leave the property, which he suggested would be three months; they had already been looking for one month: p 1-6.  He claimed there was an agreement to pay for the water charge at $100 per fortnight on top of the rent: p 1-6. 
12. [12]
    The Member identified that there was a dispute about whether rent was owing, and tried to sort out the details of that dispute.  At one point the respondents said that after the first notice to remedy breach was issued in 2017, the rent was brought up to date again: p 1-12.  The respondents sent a statement of rent owing in October 2020, which Mr Horsley said he received but did not agree with; he said he paid $1,426, the amount he said was owing: p 1-17.  He claimed he had gone through his and his partner’s bank statements, and worked out what they had paid overall: p 1-21.  He said he was willing to pay for the water, in context not disputing the proposition that the water consumption charge was properly payable by the tenants: p 1-22. 
13. [13]
    The Member gave the parties a further opportunity to resolve the matter, but they did not do so.  He then said he would deal only with the application for the warrant, and leave the issue of compensation for another day: p 1-26.  He then invited Mr Horsley to put forward any further evidence, and Mr Horsley mentioned some photos he had, but said that otherwise he had no other evidence.  The Member then proceeded to give his decision.

Decision of the Member

14. [14]
    The Member found correctly that the Tribunal had jurisdiction, and said that the application was in order and had been served.  The application for termination would be dealt with that day, and claims for compensation left for another time.  The Member made general remarks about the approach to a minor civil dispute.  He identified that there was a dispute about whether there was rent outstanding, but said that it was conceded that there was an amount for water charges which was owing.  He found that the notice to remedy breach was signed, did include particulars of the breach and stated the date by which the tenants were to remedy the breach,^[7] and that the notice to leave was in the correct form and contained the required information.  He found that the lessor had complied with all relevant statutory provisions and time requirements for the termination process, that the lessor had established the grounds of the application and the notice to leave, that the tenant had committed a breach of the agreement as stated in the notice to remedy breach, and that the breach did justify terminating the agreement: p 1-29.  A termination order was made as and from 18 December 2020, and a warrant of possession was to be issued to take effect on 19 December 2020. 

Application for leave to appeal

15. [15]
    By the QCAT Act s 142(3)(a)(i) the appellants require the leave of the Appeal Tribunal to bring this appeal.  As a general proposition, when leave to appeal to the Appeal Tribunal is required, it will be granted only where there is a reasonable argument that the decision was attended by error, and an appeal is necessary to correct a substantial injustice caused by that error, or where the appeal raises a question of general importance upon which further argument and a decision of the appellate court or tribunal would be to the public advantage.^[8] In deciding whether grounds for leave to appeal have been shown, it is relevant to consider that the proceeding was a minor civil dispute, and the obligation on the Tribunal is to make orders it considers to be fair and equitable to the parties to the proceeding in order to resolve the dispute: QCAT Act s 13(1).  The Tribunal is also required to comply with the QCAT Act s 28 and s 29. 
16. [16]
    In the present mater, it will be apparent from what I have said that the Member’s findings, that the respondents had complied with all relevant statutory provisions and time requirements for the termination process, that the respondents had established the grounds of the application and the notice to leave, and that the appellants had committed a breach of the agreement as stated in the notice to remedy breach were clearly in error.  The 2020 notice to remedy had not expired before the notice to leave was given, and so far as the notice relied on a failure to pay rent, that was contentious, with the tenants claiming that all the rent had been paid.  The Member did not purport to resolve that conflict, presumably on the basis that it was unnecessary to do so in view of the conceded breach of the obligation to pay water contributions; but that breach was not available, since the notice to leave specified a handing-over date only seven days after it was given.  Without resolving the dispute about unpaid rent in favour of the respondents, therefore, it was not open for the Member to issue a termination order on the basis of that notice to leave. 

The appeal

17. [17]
    In that situation I consider that it is appropriate to grant leave to appeal.  There appear to have been errors causing substantial injustice to the appellants, who have been denied a proper hearing, and it is also relevant for aspects of the operation of the Act to be clarified.  Despite the broad terms of the QCAT Act s 13(1), I do not consider that it gives the Tribunal power, when dealing with a matter under the Act, to disregard the provisions of the Act, particularly mandatory provisions such as s 329(1).  As well, however broad s 13(1) may be, it could not justify the Tribunal in ignoring the existing of a dispute as to whether or not the overdue rent claimed in the notice to remedy breach was really due, in whole or in part.  I agree with the statement in Betts (supra) that the discretion in s 349 does not apply to the time limits in s 329(1), and in any case, the Member did not purport to exercise the discretion under s 349 to excuse the short time.  He did not appear to appreciate the distinction between a breach constituted by unpaid rent and a breach constituted by unpaid water charges. 
18. [18]
    Having granted leave to appeal, the approach to the determination of the appeal depends on whether it is an appeal on a question of law only, which is governed by the QCAT Act s 146, which provides in essence for judicial review,^[9] or whether it is an appeal on a question of fact, or of mixed fact and law, in which case it is governed by s 147, which provides for the appeal to be decided by way of rehearing.  The correct meaning and operation of legislative provisions, and whether facts fully found fall within the terms of the legislative provision, are questions of law.^[10] Whether an event or situation exists which would (or would not) satisfy or fall within a statutory provision is a question of fact, unless on the material before the Tribunal only one factual conclusion is open, in which case it is a question of law.^[11]  In the present case, the errors of the Member, although largely of law, did involve findings of fact in that sense, but they were findings based relevantly on material which did not as a matter of law support such findings, and on that material only one conclusion was open as to the relevant factual findings.  Accordingly I consider that s 146 applies. 
19. [19]
    That is significant in the present case, because it means that I can not take into  account what has occurred since the decision under appeal.^[12]  The respondents say that, despite the statement in a document attached to the Application for leave to appeal that the appellants were “willing to continue paying rent while residing at the property”, no rent has in fact been paid since March 2021.  Further notices to remedy breach have been issued, and a further notice to leave, and there were further proceedings in the Tribunal, but these were adjourned pending the resolution of this appeal.  On 6 August 2021 the appellants emailed the Tribunal complaining that they had not received any submissions in relation to the respondents’ application to strike out the application for leave to appeal.  In response, on 24 August 2021 directions were given to ensure that the appellants had notice of the respondents’ submissions about the failure to pay rent,^[13] and time for the appellants to respond was extended to 2 September 2021, but no further submissions responding to these allegations have been made by the appellants.  The appellants had previously filed submissions claiming that the respondents had not given credit for earlier payments of rent, and implying that for this reason they were stopping paying. 
20. [20]
    This is not something I can consider in an appeal under s 146.  Even if it were an appeal by way of rehearing under s 147, there would be the difficulty that it is not just a matter of my accepting that the tenants have had reasonable opportunity to dispute the allegations of persistent failure to pay unpaid rent, despite notices to remedy breach, and have failed to do so, justifying a conclusion that there have been such breaches.  As I have said, I do not consider that the QCAT Act s 13(1) permits me to disregard the requirements of the Act.  The Act in s 337 deals with a situation where the lessor applies to the Tribunal for a termination order because of a failure to leave, where the notice to leave was given because of an unremedied breach.  To make a termination order, the Tribunal must be satisfied that the lessor has established the ground of the application and notice to leave, that the tenant committed the breach of the agreement stated in the notice to remedy breach about which the notice to leave was given, and that the breach justifies terminating the agreement: s 337(2).  That requires:

    1. (a)
       A notice to remedy breach based on a breach which has been committed.
    2. (b)
       A failure by the tenant, before the end of the allowed remedy period in the notice, to remedy that breach.
    3. (c)
       A notice to leave, issued after the expiry of the allowed remedy period, which is based on that notice to remedy breach, and which provides the correct time for a handover day; and
    4. (d)
       An application for a termination order filed after the handover day but within the period limited by the Act s 293(2). 
21. [21]
    Given this battery of requirements, I consider that it would not be open to me, in reliance on s 13(1) and s 146, now to make a termination order, and order that a warrant of possession issue as required by the Act s 350.  Besides, I have not seen copies of all the new notices to remedy breach, and cannot confirm that they were correctly issued.^[14]  I expect that the respondents will need to issue a fresh notice to leave, and perhaps first a fresh notice to remedy, and then make a fresh application to the Tribunal. 
22. [22]
    It appears from the respondents’ submissions that there was a further application for a termination order made to the Tribunal but in May 2021 the Member considered that he could not, or should not, hear that matter while the appeal was pending.  It is not clear why he took that view.  The stay order which was in place applied only to the decision of 14 December 2020, and while that decision was stayed, the agreement continued and hence the obligations on the tenants under it, and in principle there is no reason why, if there are further breaches of the agreement (such as a failure to pay rent), a further notice to remedy breach cannot issue, and if it is not complied with, a further notice to leave, which if not complied with would lay the foundation for a fresh application for a termination order.  If the requirements of s 337 of the Act are satisfied, a termination order can be made.  The fact that the appeal would be rendered pointless is not a reason why that could not be done. 
23. [23]
    This is an unfortunate situation from the point of view of the respondents, who have found themselves in a difficult position.  It will be little comfort for them to be told that the Act contains complex and technical provisions designed to safeguard the interests of tenants, and that these are difficult for litigants in person to navigate successfully on their own, at least unless they have had some practice in following the process, and conducting such proceedings.  If the applicants had obtained appropriate advice before starting these proceedings, they should have been able to avoid the pitfalls, and to have secured a valid termination order some time ago. 
24. [24]
    The appellants took the point in their Application for Leave to Appeal that there was insufficient time between the notice to remedy breach and the notice to leave.  They raised a number of issues, including that the evidence of the appellants had not been heard by the Member.  What this relates to is not obvious.  There was no evidence tendered by Mr Horsley which was rejected by the Member.  Mr Horsley referred to bank statements and a rent record he had drawn up, but did not tender them, no doubt because the Member did not attempt to resolve the dispute about payment of rent.  He also did not receive bank statements from the respondents.  At the end of the hearing he asked Mr Horsley if he had any further evidence, which prompted a reference to the photographs, which were not relevant at that stage, and were not in fact tendered.  There is no substance to that ground.
25. [25]
    Otherwise the matters raised by the appellants are irrelevant, or unnecessary to consider.  The response of the respondents and their submissions focused on the issue of non-payment of rent and water charges, both before and after the hearing, and other matters which are not relevant to this appeal, and did not address the issues discussed above.  In view of the situation when the matter was before the Member, the correct outcome was inevitable, that the Application for a warrant be dismissed.  In those circumstances, there is no point in referring the matter back to the Member, and the appropriate course is to set aside the decision and dismiss the original Application.  Given my conclusion about the substantive appeal, it is appropriate for the respondents’ application to strike out the appeal to be dismissed.  There will be no order as to costs.