Francis v Ryan[2021] QCATA 151

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

Introduction and background

1. [1]
   In January 2020^[1] the applicant for leave to appeal (`Francis’) leased a Gold Coast property (`the premises’) to the respondents (`Ryan’) for a fixed term from 5 February 2020 to 2 February 2021.
2. [2]
   However, on 26 June 2020 Francis gave Ryan a notice to leave (`the Notice’). Ryan vacated the premises under protest on 26 August 2020.
3. [3]
   The present question is whether the Notice was valid. At first instance, and at short notice, an Adjudicator had to deal with a complex `regular’ statute overlaid with hastily drafted emergency regulations. As the Adjudicator in this case justly complains^[2], he had to contend expeditiously with this legal maze under severe pressure of time and a heavy caseload, with little opportunity for reflection, and scant professional assistance.

The party’s cases as pleaded

4. [4]
   The ground set out in the Notice is this:

The lessor is preparing the property for sale and requires the property to be vacant.

5. [5]
   Ryan also asserts:

We seek damages arising from [Francis’] misuse of notice to leave. The reasons given for termination were false. The property hasn’t been renovated or sold, advertised for sale or lived in some months after our departure. Termination occurred at a time of acute financial distress, we had rental arrears and no money to move.^[3]

6. [6]
   Francis, for his part, maintains that the Notice is valid, that the stated ground is not false, and that hardship is not an ingredient of his right to serve the notice to leave.

A red herring

7. [7]
   It is common ground that an earlier extension to the property lacked the necessary Council approval. The adjudicator made two comments about this. First, that the absence of approval rendered the premises unfit `to live in’,^[4] and second, that the real purpose of the Notice to Leave was to enable approval to be secured, and not really to enable a sale.^[5] In other words, the decisive consideration was not the sale, but the means adopted to secure a sale.
8. [8]
   The `liveability’ point was not an issue in the case, as pleaded and conducted by the parties. It was not presented for adjudication. Nor was it explained how a breach of building ordinances, however marginal, would render the premises unfit for human habitation, within the meaning of section 185(2)(b) of the RTRAA..

Notice to leave rules altered

9. [9]
   Ordinarily –in `pre Covid times’ -  a lessor might give a tenant under a periodic tenancy a Notice to Leave on the ground that the lessor had a contract to sell the subject premises with vacant possession.^[6]
10. [10]
    Under the unmodified RTRAA that prerogative did not apply to fixed term agreements.^[7] Furthermore, the RTRAA required the lessor to have an existing contract to sell with vacant possession at the time of service of the Notice. In the present case the lease was for a fixed term, and no contract of sale existed when the Notice to Leave was given.^[8]
11. [11]
    However, when the subject Notice was given (on 26 June 2020) the `normal’ RTRAA was overridden by the Residential Tenancies and Rooming Accommodation (COVID-19 Emergency Response Regulation) 2020<sup>[9]</sup> (Qld) (`the Regulation’). The Covid Act states specifically that a regulation may `alter the grounds on which a notice to leave may be given.’^[10]
12. [12]
    At material times the Regulation applied to all residential tenancy agreements entered into before or after 29 March 2020^[11] `affected by the COVID-19 emergency’<sup>[12]</sup>. The `emergency effect’ is not in issue here, but in any event both parties were affected by Ryan’s inability, due to the emergency, to pay rent as it fell due.^[13] The arrears of rent were considerable, and rising.^[14] Thus, section 35 of the Regulation came into play. Instead of relying on non-payment of rent – a remedy then subject to a moratorium – Francis elected to serve a Notice to Leave under the emergency law.

Ryan’s sole ground

13. [13]
    Ryan’s case is simply that `the reasons for termination were false’. That ground of alleged liability was repeated and elaborated by him on trial.^[15]
14. [14]
    Francis’ response is that the intention to sell was genuine, but was unavoidably delayed for five or six months by renovation work, and particularly by a need to obtain Council approval of unauthorised additions to the property.^[16]
15. [15]
    While it is apparent on a reading of the transcript that the Adjudicator was not impressed by that explanation, the true basis of his decision is this:

The [Covid emergency] regulation that applied at the time of the giving of the form 12 ... enabled an owner in financial difficulty or suffering excessive financial hardship to give a notice to leave ... with ground, namely, the need to have ... vacant possession of the property in order to be able to sell the property because of the hardship. ... [T]he form 12 could not and should not have been given at all, because the reason for the owners wanting vacant possession back was so as to comply with council requirements to get approvals for unapproved structures on the property that the owners knew of prior to entering into this lease. ^[17]

16. [16]
    However, neither party made an issue of the landlord’s financial hardship, if any. That question was raised by the Adjudicator at a late stage of the hearing^[18] and in his reasons for decision.
17. [17]
    We are left, then, with two questions on the liability aspect. (a) Was the stated intention to sell the property true or false? (b) If it were true, was it also necessary for Francis to show financial hardship?
18. [18]
    Arguably the second question need not be answered. As we have just seen, Ryan did not mention the hardship issue in his application and it was not canvassed by the parties during the trial.

Was the stated ground false?

19. [19]
    There is, to say the least, insufficient evidence that, when the Notice to Leave was given, Francis did not intend to sell the property? Ryan seeks to draw that inference from circumstantial evidence, but so far as that goes, it points in the other direction. The delay, amid the Covid emergency, was about four months from Ryan’s departure, with renovations and Council approvals intervening. It is reasonable to suppose that these steps were not facilitated or expedited by the Covid emergency.
20. [20]
    The application for Council approval was initiated in July 2020, about one month before Ryan moved out - two months after the notice was served. Council approval was given on 28 October 2020, a selling agent was appointed 3 days later, and the property was sold on 16 December 2020.^[19] Francis’ evidence, uncontradicted, is that redecoration and repairs to the property cost about $12,000, and he submits that this is plainly consistent with an intention to sell.^[20]
21. [21]
    The available evidence, as distinct from Ryan’s speculations and aspersions upon Francis’ motives, or suspicions about his use of a legal loophole, does not support the allegation of falsehood. With respect, uncontradicted evidence of preparations for sale is `glaringly’^[21] at odds with the proposition that the reason given for the Notice is false.
22. [22]
    Besides, while the Adjudicator evinced doubts about the `wanted for sale’ explanation in the course of evidence, he did not actually decide that point in his judgment. At that stage his focus was on the hardship question, which he himself raised and emphasised.
23. [23]
    I reject the allegation of falsehood. It is not established by the evidence and the primary judgment contains no decision thereon.

Hardship of lessor needed? A question not pleaded

24. [24]
    While this was not a matter pleaded by Ryan, it was treated as the central issue by the tribunal, and by the appellant Francis in his application for leave. It was not raised in the Ryan’s initiating application, or by either party at the hearing. It is doubtful, at least, whether I am required to consider it. However, as QCAT is not a court of strict pleading^[22], and the parties were self-represented, I shall deal with it contingently.
25. [25]
    In my view the emergency Regulation did not require Francis to show financial hardship. In support of his application for leave, Francis presents a detailed and cogent argument to that effect.^[23]
26. [26]
    The plain wording of the Regulation, and judicial authority, support him. ^[24] It is significant that several other grounds of termination listed in the Regulation explicitly require an element of hardship. The ground relied on by Francis does not. Incidentally, if it were necessary for the landlord to prove financial hardship, there is the undisputed fact that, as at June 2020 the rent was significantly in arrears and rising, albeit through no fault of Ryan’s.
27. [27]
    As at 26 June 2020 section 35 of the Regulation materially provided:

1. (1)
   A lessor may give a notice to leave the premises to a tenant because –

   3. (a)
      The lessor is preparing to sell the premises and the preparation requires the premises to be vacant; or

   3. (b)
      The lessor has entered into a contract to sell the premises with vacant possession.

28. [28]
    Section 35 of the Regulation overrode section 286 of the pre-existing RTRAA.^[25]
29. [29]
    In its application to fixed-term as well as periodic tenancies Regulation 35 was less favourable to Ryan than section 286 of the `pre-Covid’ Act may have been. Considering the `crisis atmosphere’ of the special Regulation this seems curious^[26], but section 35 is unequivocal and unambiguous, leaving no room for an implication that hardship of either party is a precondition of its operation.^[27] (But in fact each party was experiencing financial pressure because of the pandemic.) The aspirational generalities of section 2 of the Regulation cannot prevail over the specifics of section 35^[28], or insert conditions or qualifications affecting its plain words.
30. [30]
    While Ryan’s submissions quote extensively from parliamentary debates, neither that material, nor sympathy for Ryan, who may have been better placed under the `normal’ RTRAA, can negate, alter or add to that language. `[P]lain and ordinary words ... must be given their plain and ordinary meaning’.^[29] Compare and contrast other sections of the Regulation, where a necessity for `excessive hardship’ is clearly specified.^[30] This supports the view that section 35 of the Regulation is to be taken literally, without the importation of any extrinsic modification, condition or qualification. As it stands, section 35 is neither ambiguous nor obscure’^[31]. Form 12 simply states:

During the emergency period (until 31 December 2020) lessor/agents can end a tenancy if they require the property to be vacant to prepare the property for sale.^[32]

31. [31]
    With respect, the finding that Francis was bound to show hardship is erroneous. If I am required to express a concluded view on that issue although it was not pleaded or argued by the parties, I reject the hardship proposition.

Resolution

32. [32]
    The falsity issue was not decided, and the hardship point was not litigated. It follows that the application for leave to appeal must be allowed, and the consequent orders made, as set out below. In the light of my decision on the liability issue it is unnecessary to consider the other grounds of appeal.

ORDERS

1. (1)
   The application for leave to appeal is granted.
2. (2)
   The appeal is allowed.
3. (3)
   The decision of the Tribunal made on 3 February 2021 is set aside.
4. (4)
   The application of the respondents filed on 9 November 2020 is dismissed.