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- Unreported Judgment
Smolcic v Ray White Rockhampton QCATA 136
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Smolcic v Ray White Rockhampton  QCATA 136
manda smolcic and danny gualtieri
Ray White Rockhampton
ORIGINATING APPLICATION NO/S:
18 November 2021
On the papers
Judicial Member D J McGill SC
LANDLORD AND TENANT – RESIDENTIAL TENANCIES LEGISLATION – OBLIGATIONS, PROHIBITED MATTERS AND PROTECTION FOR LESSEES – RENTAL BONDS OR SECURITY DEPOSITS – dispute over repayment of bond held by Residential Tenancy Authority – earlier proceedings in the Tribunal between the parties about the tenancy – whether the decision in the earlier proceeding meant that the bond was to the paid to the lessor – appeal allowed
Residential Tenancies and Rooming Accommodation Act 2008 (Qld) s 137
Campbell v Queensland Building and Construction Commission  QCATA 34
Crime and Corruption Commission v Lee  QCATA 38
Li v Heading  QCATA 107
Property Indulgence v Allen  QCATA 66
Stone v Grundy  QCATA 68
White v Tomasel  2 Qd R 438
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 appellants were formerly tenants of residential premises of which the respondent was the agent of the lessor. On 10 July 2019 they filed in the Tribunal at Rockhampton an application for minor civil dispute – residential tenancy dispute claiming the return of a rental bond of $2,000 paid in respect of the tenancy. On 11 December 2019 the matter came on for hearing before a Member who ordered that the bond be paid to the agent. The tenants have sought leave to appeal from that decision.
- The tenancy was subject to the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (“the Act”). The Act regulates rental bonds, requiring them to be paid to the Residential Tenancy Authority (“RTA”) and providing that, if there is a dispute about them, the Tribunal has power to make an order to resolve that dispute. That was the power invoked by the tenants in the present matter.
- Because this matter is a minor civil dispute, leave is required to appeal to the Appeal Tribunal. 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 Appeal Tribunal would be to the public advantage. 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 was to make orders it considered to be fair and equitable to the parties to the proceeding in order to resolve the dispute: QCAT Act s 13(1). The Tribunal was also required to comply with the QCAT Act s 28 and s 29.
- The parties entered into a tenancy agreement in Form 18a under the Act for a tenancy of a residential property for a term from 17 October 2018 to 16 April 2019. There were a number of aspects of the condition of the premises which gave rise to complaints by the tenants, and on 24 April 2019 the tenants filed in the Tribunal an application under the Act s 94 for reduction of rent, on the ground that the premises were partly unfit to live in. By this time the tenants were holding over after the end of the term, but the tenancy continued as a periodic tenancy. They vacated the premises on about 17 June 2019.
- Before filing the application in the Tribunal, the tenants had given a Dispute Resolution Request to the RTA, received on 30 October 2018, but the dispute was not resolved by the RTA, or at a later mediation. After the tenants vacated they claimed the return of the rental bond from the RTA. A dispute arose between the parties about that bond, which led to the application filed on 10 July 2019.
- The first matter came on for hearing before a Member on 24 July 2019. Mention was made of the later application concerning the rental bond, which at that stage had not been the subject of mediation. At that hearing the agent conceded some loss of amenity. The Member made findings about the various matters the tenants complained about, and held that collectively they amounted to a loss of amenity. The rent reduction allowed for this was $125 per week from 17 October 2018 to 31 January 2019, and $75 per week from 1 February 2019 to 17 June 2019. That came to $3,359.37, to which the Member added a filing fee of $120.50 to produce an order that the agent pay the tenants $3,479.87 “as compensation in full satisfaction of this claim.” That was paid by the agent. There has been no appeal from that decision.
- When the claim in respect of the bond came on for hearing on 11 December 2019, the Member noted that no order was made about the bond at the earlier hearing and that the bond of $2,000 was still held by the RTA: p 1-3. The agent advised that they were claiming for the costs of cleaning and carpet cleaning, and the Member responded that it seemed that that had all been determined already. The Member then suggested that, if he had been aware of the bond at the earlier hearing, he would have ordered that the bond be returned to the tenants, and that the agent pay “the balance of $1,479.87.” The Member asked the tenant if she agreed with that, and she replied that she was confused: p 1-4. She thought the bond was a separate issue. The Member suggested that the parties talk, and stood the matter down: p 1-5.
- Later when the matter resumed the agent said that the tenant was happy for the bond to come to them. At no time did the tenant agree to that in the hearing; she said first that she “wouldn’t mind talking to the tenant’s union”, and later that “I’m just confused how he said X amount of dollars from this date, and X amount of dollars from this date to this date rent reduction, and it added up to the figure that we got paid”: p 1-6. The Member then said: “The reason that the [Tribunal] would’ve made that determination was taking into account all of the material that you’ve filed again on this material. So it’s the same argument. So I’ll order that the RTA pay to the respondents the sum of $2,000 held on bond number [stated].”
- The Member recorded that that order was made “by consent” and the formal decision of the Tribunal also stated that it was “by consent”. It is clear from the transcript that at no time did the tenant actually consent to that order, so the decision was not in fact by consent, and that is not an obstacle to the grant of leave to appeal, or to an appeal.
Submissions of the parties
- On the appeal the tenants submitted that the earlier decision related only to the reduction of rent application, and that there was no basis for the bond to be paid to the agent. Issues of breach of the QCAT Act s 28 and s 29, and a failure to give adequate reasons, were also raised. The agent supported the decision of the Member, that the effect of the earlier decision was that the bond was to be paid to the agent, because it had not been applied in part satisfaction of the earlier order. It was submitted that during the hearing of the first matter there were discussions about the fact that the agent was seeking payment from the tenants for carpet cleaning and general cleaning of the premises, and that the Member took these figures into account in the calculation of compensation awarded to the tenant.
- The rental bond is a form of security paid by the tenant to guard against a failure by the tenant to pay rent, or otherwise to perform the tenants’ obligations in respect of the tenancy. It follows from the terms of the Act that the Tribunal has power to resolve disputes about a rental bond. The Tribunal also has power under the Act s 94 to order a reduction of rent, or under the Act s 420 to order compensation for breach of the lessor’s obligations under the Act. If at the end of the tenancy there is unpaid rent, the lessor can claim payment of that out of the rental bond. If a tenant fails to leave the premises clean, or to comply with an obligation to clean the premises or the carpet, a claim for compensation for the cost of that out of the rental bond can be made by the lessor. The same applies to any other breach of obligation by the tenant in respect of the tenancy.
- Subject to any proper claim by the lessor, the bond remains what it has always been: the property of the tenant. Under the Act it has been paid to the RTA, as a sort of statutory trustee, but it simply provides a form of security, to the amount of the bond, for any legitimate claim brought by the lessor. Subject to any such claim, it remains the property of the tenant, and the tenant is entitled to the return of it.
- In the first matter, the tenants claimed a reduction of rent. The outcome was a decision that the agent pay the tenants a particular amount. Whether that was properly characterised as a reduction of rent or as compensation for breach of the lessor’s obligation under the Act s 185, it is clear from the reasons for the earlier decision that it was assessed in a way which did not take into account the existence of the rental bond. Given that it required a payment to the tenants, the existence of the rental bond was irrelevant to that obligation. The proposition that the amount of the bond could properly have been deducted from the amount payable to the tenants by the agent was quite wrong. Had the bond been dealt with in that way on the earlier occasion, the tenants would have had grounds for an appeal.
- The proposition advanced by the Member, that the effect of the earlier decision was that the bond was to the paid to the agent, was wrong. The position expressed by the tenant at the hearing, that the bond application was a separate matter from the earlier application, was quite correct. The Member should have accepted that submission, and (subject to any proper claim proved by the agent) should have ordered that the bond be paid to the tenants.
- It follows that the approach of the Member was in error, and as a result the tenants have prima facie been deprived wrongfully of the amount of the rental bond. In the circumstances it is appropriate to grant leave to appeal, to allow the appeal, and to set aside the order for the payment of the bond to the agent. It is therefore unnecessary to consider the other matters raised in submissions by the tenants. No doubt the decision has already been acted on, so it is appropriate to order that the amount of $2,000 be paid by the agent to the tenants, so as to put the parties in the same position as if the Tribunal had ordered that the bond be paid by the RTA to the tenants.
- One concern I had about resolving the matter in this way was that the Member at the hearing also never resolved the agent’s claim for the cost of cleaning and carpet cleaning. Indeed, the matter did not even proceed to the point where the agent quantified the amount claimed on that basis, or put forward any evidence that such cleaning had occurred, at any particular cost. That the tenants had failed to clean when they vacated might not have been difficult to establish. In the entry condition report, the tenants had repeatedly said that the premises were filthy when they moved in, and at the end said they would not clean them when they left. Their material also referred to a promise by the agent after they moved in that the property would be cleaned, which they say did not occur.
- In the first matter a number of specific alleged deficiencies were dealt with, but the failure to clean generally was not raised, although it was referred to by the tenants during the hearing. No findings were made by the Member in the first matter about whether the premises (or the carpet) were clean when the tenants moved in, so that issue had not been resolved on that occasion either. Presumably if the hearing in this matter had not been cut short by the erroneous idea that the disposition of the bond had been determined in the first matter, the Member would have proceeded to decide whether the agent had any and what claim against the bond on that basis.
- It did not emerge at the hearing whether the agent had made a dispute resolution request to the RTA in respect of a claim for compensation. A claim for compensation for breach of an agreement is not an urgent application, so such a request was required before an application for compensation could be filed in the Tribunal: the Act s 416. The power of the Tribunal to order compensation for breach of an agreement under the Act s 420 arises “if an application about a breach of a residential tenancy agreement … is made to a tribunal … .” None of these issues were dealt with by the Member. There is no counter-application by the agent on the file.
- In submissions in relation to the application for leave to appeal, the agent did not seek an order that, if the appeal were successful, the matter should be remitted to the Tribunal to allow the agent’s claim for compensation for cleaning and carpet cleaning to be pursued. The submission that these issues were raised during the hearing of the first matter was wrong; I heard no such discussion on the recording of that hearing. The claim that such figures were taken into account in the determination of the amount of compensation to be paid to the tenants was also wrong. The Member did not take into account a failure to clean generally, or a failure to clean the carpet generally, as part of the loss of amenity for which he allowed a particular amount in the first matter. In those circumstances, I will not remit the matter to the Tribunal to enable consideration of these claims by a Member.
- The tenants paid a filing fee of $123.20 on filing their application in the Tribunal, and a further filing fee of $345.80 on the filing of their application for leave to appeal. In the circumstances the respondent agent should also pay these fees to the tenants, since the appeal has been successful, on the basis that the original application should have been successful. The decision of the Appeal Tribunal is therefore as follows:
- Leave to appeal from the decision of the Tribunal at Rockhampton on 11 December 2019.
- Appeal allowed.
- Decision of the Tribunal set aside.
- Order that the respondent pay to the appellants the sum of $2,469.00 within 21 days.
It is convenient to refer to the appellants as “the tenants” and to the respondent as “the agent”.
In Part 3 of Chapter 2.
This follows by implication from the Act s 137, which contemplates an order of the Tribunal as to the payment of a rental bond, as the ultimate means of resolving a dispute about the entitlement to the bond. If the application is not otherwise covered by the Act, it can be made under s 429. See Stone v Grundy  QCATA 68 at ; Li v Heading  QCATA 107 at .
Queensland Civil and Administrative Tribunal Act 2009 (Qld) (“the QCAT Act”) s 142(3)(a)(i).
Crime and Corruption Commission v Lee  QCATA 38 at , citing appellate authority. See also Campbell v Queensland Building and Construction Commission  QCATA 34 at .
A copy of the agreement was attached to the tenants’ application.
MCDT97-19 filed in Rockhampton (“the first matter”). I have seen a copy of this file. The agent stood in the position of the lessor, as it did in this matter, in accordance with the Act s 260.
The Act s 70.
This was the finding in the decision in the first matter.
I have listened to a recording of the hearing on that occasion.
The Member was the same Member who had presided at the hearing of the first matter.
At the hearing the female tenant appeared for the tenants.
The Act s 111. It is to be paid to the RTA: the Act s 116.
This follows from the terms of the Act s 137. The Act makes no other provision for the resolution of a dispute about the rental bond.
Property Indulgence v Allen  QCATA 66 at ; Sackville & Neave, Australian Property Law (8th Ed 2008) para 8.215; The Laws of Australia, Commercial and Residential Tenancies, Para 28.9.1240.
White v Tomasel  2 Qd R 438 at ; . See also the QCAT Act s 146(d).
A copy of this report was attached to the tenants’ application. See also the Act s 188(4).
This was written in the body of the application.
See Property Indulgence (supra) at , .
- Published Case Name:
Smolcic v Ray White Rockhampton
- Shortened Case Name:
Smolcic v Ray White Rockhampton
 QCATA 136
D J McGill SC
18 Nov 2021