Ku v East & East (No 2)[2024] QCATA 49

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

What is this application about?

1. [1]
   The Easts rented a dual occupancy tenancy (home and granny flat) from Ms Ku. From the outset of the tenancy and throughout its duration, neither premise was maintained by Ms Ku in good repair.
2. [2]
   Towards, but before the end their two-year tenancy^[1] the Easts, by an application filed 18 August 2022 (MCDT2065/22), sought compensation in the sum of $6,000, an order for the return of their bond ($3,000) and relief from payment of outstanding water invoices ($850). The application relied upon section 191 of the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (‘RTRAA’) as grounds for the relief sought, which provides as follows:^[2]

191 Orders of tribunal

1. This section applies if, on an application made to a tribunal by the tenant for an order under this section, the tribunal is satisfied—

1. the lessor has failed to comply with the lessor’s maintenance obligation under section 185(3) or 186(4); and
2. the failure results in the health or safety of persons being endangered; and
3. the failure is reasonably capable of being remedied.

2. The tribunal may order the lessor to remedy the failure within the time decided by the tribunal.

3. [3]
   Upon hearing the matter on 14 September 2022 – six days before the tenancy ended - the Tribunal ordered that Ms Ku pay the Easts $20,700 in compensation, relieved the Easts of their obligation to bond clean, and to carpet clean and ordered the Easts to remove their belongings at the end of the tenancy (‘the decision’). No order was made as to the payment of the bond or with respect to the outstanding water invoices.
4. [4]
   Ms Ku seeks leave to appeal and to appeal the decision^[3] because:

The adjudicator awarded the tenants more than twice the compensation claimed without giving reasons.

5. [5]
   And:^[4]

I don't know why the tenant demanded a compensation of $6.000 and the court ruled for $20,000.

6. [6]
   In Ms Ku’s absence (she was then overseas), the Easts informed the Appeal Tribunal in a directions hearing held on 23 August 2023 that they, too, did not understand how the Tribunal came to award them compensation exceeding the $6,000 amount of their claim. They also said that they had not received any payment from Ms Ku, however, had since vacated the tenancy and received payment of their bond.
7. [7]
   A hearing transcript was ordered, and directions issued inviting submissions on apparent defects in decision made by the Tribunal below. Submissions received did not address the apparent defects but rather sought to relitigate the dispute.
8. [8]
   The decision of the Appeal Tribunal and the reasons for it now follow.

Applications for leave to appeal or appeal

9. [9]
   The Appeal Tribunal will typically grant leave to appeal if satisfied that:

   1. there is a reasonably arguable case of error in the primary decision;^[5] and
   2. there is a reasonable prospect that the appellant will obtain substantive relief;^[6] and
   3. leave is needed to correct a substantial injustice caused by the error;^[7] or
   4. there is a question of general importance upon which further argument, and a decision of the Appeal Tribunal, would be to the public advantage.^[8]

Error/s in the primary decision

10. [10]
    The Appeal Tribunal has observed that “there is a fundamental obligation on any court or tribunal to satisfy itself as to jurisdiction when being asked to quell controversies that come before it”.^[9]
11. [11]
    Sections 414A to 417 of the RTRAA provide for how tenancy applications are made, including how “urgent’ and “non urgent” applications are dealt with.
12. [12]
    An “urgent” application is defined in section 415 to include an application for orders under section 191, but not applications under section 94 (rent reduction), 419-420 (compensation) or 429 (general tenancy disputes).
13. [13]
    The RTA dispute resolution process must have been completed (not merely requested) before a non-urgent application is made to the Tribunal, but it is not required for urgent applications (section 416).
14. [14]
    When directly asked by the presiding Adjudicator whether they had participated in dispute resolution processes with the Residential Tenancies Authority (‘RTA’) the parties replied that they had not.^[10]
15. [15]
    This precluded the Tribunal from considering any application or making any decision grounded upon sections 94, 420 or 429 of the RTRAA as it simply did not have jurisdiction to do so unless the RTA dispute resolution process was completed before the MCDT application was filed. 
16. [16]
    The only orders that could be made were those under section 191 of the RTRAA, namely, to order the lessor to remedy the failure within the time decided by the tribunal, with no power to make a compensation order.^[11]
17. [17]
    The decision made therefore went well beyond jurisdiction. This is an error of law.
18. [18]
    In any event, in calculating the award to the tenants, based upon their payment of $750 per week for the house and granny flat, the learned Adjudicator stated (emphasis added):^[12]

I find that the tenants in these circumstances have established and satisfied me and the tribunal as to a loss of amenity that far exceed a mere inconvenience with respect to unsafe, unsecure common-living areas, in particular those stairs, defective building designs in relation to drainage, roof leakage - and which has caused the tenancy to flood, which has prevented the tenant from the peace and enjoyment of the granny flat on most occasions and in particular.

Accordingly, and for those reasons, they are appropriate for a rent reduction order under section 94 of the RTRAA.  The impact on the tenants - I am satisfied as to their loss of amenity - was, in my view, significant.  I exercise my discretion and will exercise my discretion to reduce the rent in relation to, as stated before, the issues in relation to leaks and mould for 196 days at 2.5 per cent, as stated before, being an amount of $3,675. 

In relation to the rent reduction in relation to, as stated, peace and enjoyment, in particular the granny flat, which I conclude and agree has started.  I agree that under that section that a five per cent rent reduction is applicable in these circumstances for 454 days, being an amount of $17,025.  I also find further that the lessor has breached its obligations under section 185 of the RTRA to provide a property and maintain that property in good repair, and that this failure impacted the tenants quiet enjoyment of the property as follows, as stated before, lack of amenities, including hot water, flooded areas becoming significantly dangerous and mould infected, ability to sleep and even maintain and enjoy their own rooms and peace and quiet in their house, and it was for that reason alone that the five-per-cent rent reduction has been afforded in these circumstances, for a period of 454 days. 

19. [19]
    Respectfully, there are at least two issues with this. Firstly, an application for compensation for breach pursuant to section 419 must be made within 6 months of the (in this case) tenant “becoming aware of the breach”. Putting aside the failure to complete RTA dispute resolution for a moment, an award of compensation for breach for 454 days risks going well beyond the Tribunal’s reach for such claims.
20. [20]
    Secondly, orders for rent decreases under section 94 are not time limited like section 419 claims, but must be prospective, from the date of the RTA dispute resolution request,^[13] and not retrospective, even if a decrease in future rent may be assessed by reference to past loss of amenity.^[14] The calculation of a rent reduction of $17,025 could only be set-off against rent payable from the date of the dispute resolution request to the end of the six days remaining in the tenancy. Without a dispute resolution request and the completion of dispute resolution processes, the order could not have been made at all.

What should happen next?

21. [21]
    The Tribunal below made orders without jurisdiction to do so, and a substantial injustice has resulted. Leave to appeal is granted on that basis, and the appeal allowed.  The decision made in MCDT2065/22 on 14 September 2022 is set aside and returned to the MCDT jurisdiction to be reheard before a differently constituted Tribunal.
22. [22]
    The Appeal Tribunal observes that the tenancy has, now ended and the parties may not have engaged in dispute resolution processes with the RTA such that the original claim itself may now lack utility. These are issues to be considered afresh when considering jurisdiction.