Campbell v Donker
[2013] QCATA 6
•11 January 2013
| CITATION: | Campbell v Donker [2013] QCATA 6 |
| PARTIES: | Peter Matthew Campbell t/as Peter Campbell Realty (Applicant/Appellant) |
| v | |
| Andrew Donker (Respondent) |
| APPLICATION NUMBER: | APL150-12 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Richard Oliver, Senior Member |
| DELIVERED ON: | 11 January 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | Leave to appeal is granted.1. The appeal is allowed.2. The Tribunal’s decision of 20 April 2012 is set aside.3. The applicant must pay to the respondent the sum of $170 by 15 February 2013.4. |
| CATCHWORDS: | MINOR CIVIL DISPUTE – Residential tenancy – where tenant complained of mould in rented premises for in excess of two years – where lessor failed to take steps to prevent the mould or investigate its cause in that period – where tenant stopped paying rent and lessor applied for a termination order – where Tribunal ordered lump sum compensation for lessor's breach of s 185 of the Residential Tenancies and Rooming AccommodationAct 2008 under s 95 of the Act – whether lump sum compensation can be ordered as a rent decrease under s 95 of the Act – whether lessor's conduct properly categorised as a breach of the residential tenancy agreement under s 419 of the Act entitling the tenant to compensation – whether the 6 month limitation in s 419 applicable – consideration of Tribunal’s power to order a rent decrease under s 95(3) of the Act Queensland Civil and Administrative Tribunal Act2009, ss 142(3), 146 Underwood v Queensland Department of Communities (State of Queensland) [2012] QCA 158 |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of Queensland Civil and Administrative Tribunal Act2009 (QCAT Act).
REASONS FOR DECISION
In 2008 Mr Donker entered into a residential tenancy agreement to rent a house at Jagora Drive, Albany Creek. Peter Campbell Realty was the managing agent for the property. Mr Donker, from the commencement of the tenancy, has complained of mould in the premises. It seems that after a complaint was made early in the tenancy the mould issue was addressed by the agent, but not fixed, but nothing further happened until early 2012.
Because there was further moisture penetration into the house in February 2012, Mr Donker called in a plumber, 5 Star Plumbing and Drainage, to attend the premises and carry out urgent repairs. Their report, which was tendered in the proceeding, states:
“Inspection of the roof area above kitchen/lounge due to water leak from valley gutter, on inspection roof found to have water damage to roof trusses and wall sheeting producing mould on interior walls. In my opinion I believe roof need (sic) to be attended to by a builder as it has shifted with the water damage and needs repair, valley gutter and external gutter do not have sufficient gap for water to flow away.”
The agent was contacted but nothing was done about the ongoing mould issue so Mr Donker decided to stop paying the rent. The rent was $410.00 per week. As a consequence Mr Campbell, the agent, filed an application in the Tribunal asking for a termination order for non payment of rent. That application was filed on 8 March 2012. The application came on for hearing before a Tribunal Adjudicator on 30 March 2012. At the time of hearing the total arrears of rent was $3,503.57.
Just prior to the hearing, Mr Donker sought some advice from the Tenant Advice Advocacy Service who told him he should continue to pay the rent but if he had a claim for loss of amenity, he should file an application seeking a reduction in rent. Some days before the hearing, about 20 March 2012, Mr Donker filed a counter-application in which he claimed a rent reduction for the previous 12 months of $110.00 per week being a total of $5,720.00.
As Mr Campbell did not get the counter application in sufficient time, he was not in a position to proceed with Mr Donker’s application for the rent reduction when the matter came on for hearing. There was some discussion during the course of the hearing about the mould problem and that was when Mr Donker produced a report from a plumber confirming that there was a leak in the roof.
Because of the late notice of the counter-application, and the production of the report from the plumber, was hearing was adjourned. Mr Donker agreed to pay $1,000.00 off the arrears or rent and continued to pay rent in accordance with the tenancy agreement. Despite the arrears of rent, the learned Adjudicator decided that it would be unfair to terminate the tenancy at that point until the counter-application could also be considered.
The matter came back on for hearing on 20 April 2012. Mr Campbell did not appear at the second hearing. He had however, filed an additional inspection report from a plumber, Gerry Hennessy and Company, Roof Specialists, who said that rivets have sheared off two laps of the roof valley iron causing water to enter into the roof cavity. There is no doubt that the there had been water penetration which is the most probable cause of the mould.
The only matter for consideration at the second hearing was the question of compensation for the effects of the water moisture in the building and the consequential mould. The learned Adjudicator accepted Mr Donker’s evidence that the mould problem had been in existence for more than 12 months. He found that the lessor was in breach of the tenancy agreement. He said in his reasons:
“Under s185(3)(a) of the Residential Tenancy & Rooming Accommodation Act 2008 the landlord has an obligation to ensure that the premises are fit for the tenant to live in. The evidence here is that one year into the tenancy there was a leaky roof and consequential mould which has continued to grow, notwithstanding the tenant bringing it to the attention of the agent on numerous occasions throughout the period of the tenancy.
I therefore find that on the basis of the evidence, the documents and material on the file including the photographs and the invoices the inspection reports, that there is a breach of the landlord’s fundamental obligation to ensure that the premises are fit for the tenant to live in; that is there is a breach of s 185(3)(a) of the Residential Tenancies and Rooming Accommodation Act 2008 entitling the tenant to rent reduction under s 94 of the Act.”[1]
[1] Transcript page 13.
On the basis of that finding he allowed a rent reduction of $110.00 per week for 52 weeks in the total sum of $5,720.00. He also allowed the cost of the emergency repairs by 5 Star Plumbing of $170.00. The total amount payable by the lessor to Mr Donker was $5,890.00. There is no reason why Mr Donker should not recover the cost of emergency repairs of $170.00.[2]
[2] RTRA Act, s 221.
On 14 May 2012 Peter Campbell Realty, as agent for the lessor, filed an application for leave to appeal or appeal. In the grounds of appeal the applicant contends that the Tribunal had no jurisdiction to make the compensation order by way of rent reduction because the counter-application for rent reduction was not made within 6 months of the tenant becoming aware of the owner’s breach of the tenancy agreement, that is, failing to maintain the premises in a way that the premises remain fit for the tenant to live in and in good repair.[3] The time limitation is set out in s 419 of the RTRA Act. That section deals with breaches of residential tenancy agreements. Section 420 of the Act sets out what order can be made about breaches of the residential tenancy agreements which includes an order for compensation.
[3] RTRA Act, s 185(3).
Because this is an appeal from a decision in the minor civil disputes jurisdiction of the QCAT the appeal can only proceed if leave or permission of the Appeal Tribunal is granted.[4] The circumstances in which leave will be granted are where there is some question of general importance upon which further argument, and a decision of the Appeal Tribunal would be to the public advantage; or, there is a reasonably arguable case of error in the primary decision and a reasonable prospect that the applicant would obtain further substantive relief. Another question sometimes asked is: is leave necessary to correct a substantial injustice to the applicant, caused by some error?
[4] QCAT Act, s 142(3).
The applicant complains here that throughout Mr Donker’s evidence at the first hearing and as is apparent from the transcript of the second hearing, he was aware of the lessor’s breach well before the 6 month limitation period.
In his counter-application, Mr Donker says that he has been asking for repairs to the roof, which has been “leaking for over a year”. In the hearing on 30 March 2012 he was asked when did he first inform the lessor about the water and mould problem and he said “it would have been 3 years ago”.[5]
[5] Transcript page 6.
In the subsequent hearing on 20 March 2012 he again said that the mould had been there for three years but it was patched up with some paint.[6] The evidence went on to disclose that after the painting over the mould it returned and that was about two years before the application was filed.[7] Then, Mr Donker told the Tribunal that he made a complaint to the agent before October 2011 about water coming into the premises. He also said that the moisture problem started at the time the “major storm came through The Gap” which was in or about 2009.
[6] Transcript page 4.
[7] Transcript page 5.
The effect of all this evidence is that Mr Donker was aware of the water penetration problem into the ceiling causing mould to occur in the liveable spaces for well in excess of 6 months prior to when he made his application for rent reduction.
Although the learned Adjudicator found the lessor in breach of a term of the residential tenancy agreement[8] he purported to order compensation by way of a rent reduction under s 94 of the Act. The difficulty with this approach is that s 94 is not a provision that authorises the payment of compensation but only permits the Tribunal to make an order for a rent decrease in certain circumstances. The provision that deals with breaches of the tenancy agreement is s 419 and compensation can be ordered under s 420. Once he made a finding that the lessor breached s 185 then it seems s 94 has no part to play in the award of compensation by way of a of rent decrease.
[8]Section 52 of the RTRA Act provides a duty under the Act is to be taken to be a term of the residential tenancy agreement.
A number of issues arise from the way the learned Adjudicator approached his decision. The first is whether the Tribunal can order a rent decrease under s 94 as a result of a breach of the tenancy agreement under s 419. The second issue is whether an order for a rent decrease under s 94 can be by way of a lump sum to compensate a tenant over a period of time during which the premises were in a state of disrepair prior to the making of the application for relief.
The RTRA Act provides for two ways in which a tenant can obtain relief if the premises fall into disrepair and the lessor does not take steps to remedy the situation. The first, under s 94, is to make an application for a decrease in the rent to be paid. The second way is to make a claim for compensation for breach of the residential tenancy agreement under s 419. Both are separate and distinct causes of action open to the tenant.
An application under s 94 of the RTRA Act is permissible providing that the circumstances referred to in subsection (1) and (2) are satisfied. Subsection (1) refers to premises that are destroyed or, made completely or partially unfit to live in a way that does not result in a breach of the agreement; or no longer may be used lawfully as a residence or are required compulsorily by an authority.
Subsection (2) refers to, relevantly here, premises where the amenity or standard of the premises decreases substantially other than because of malicious damage caused by the tenant.
Once the learned member found that the loss was as a result of the lessor’s breach of the agreement, then it is difficult to see how subsection (1) has any application to the circumstances of this case.
That then leaves subsection (2) which would apply if there is a substantial decrease in the amenity or standard of the premises. However the learned Adjudicator did not make any findings about whether the circumstances fell within subsection (1) or (2). He simply made reference to the tenant being entitled to a rent reduction under s 94. For subsection (2) to apply there would have to be a finding of fact that the presence of mould resulted in the amenity or standard of the premises decreased substantially.[9] The learned Adjudicator did make a finding that the mould was not isolated but scattered throughout the house and it is a noxious substance potentially endangering the health of the occupants and presenting a hazard to the occupants. However Mr Donker continued to live in the premises for a number of years before taking steps to deal with the issue, and that was to stop paying rent rather than applying for a decrease in the rent. Even accepting the Tribunal’s comments amounted to finding that the reduction in amenity or standard of the premises was substantial there remains a question mark as to whether s 94 makes provision for rent decrease over the period the amenity or standard of the premises was reduced.
[9]Underwood v Queensland Department of Communities (State of Queensland) [2012] QCA 158 at para [26].
The Court of Appeal in Underwood v Queensland Department of Communities (State of Queensland) recognised that s 94 of the Act gave rise to awkward questions of construction.[10] The Court accepted that on a literal construction of s 94(3) if the circumstances fell within sub-sections (1) and (2) the rent payable under the tenancy agreement would decrease accordingly. The extent of the decrease would depend on the extent to which the premises were unable to be enjoyed by the tenant. It also said that s 94(4) confined the right to apply for a rent reduction where s 94(1) applies to circumstances in which premises are “partly unfit to live in”. The difficulty in the construction of s 94(3) arises if, assuming there is a finding of substantial decrease in amenity or standard of the premises and there is no agreement about reduction, the Tribunal is required to make an order. The only power to make an order in the section is in s 94(4):
A tribunal may make an order for a rent decrease only if-
[10] [2012] QCA 158 at para [24].
a) the tenant applies to the tribunal for the order; and
(b) if this section applies because of subsection (1) – the premises are partly unfit to live in.
Although sub-section (3) makes reference to an order for a decrease in rent made by the Tribunal the actual power to make the order is contained in sub-section (4). An order can only be made for a rent decrease in the circumstances set out in the sub-section. The sub-section itself limits the circumstance where a rent decrease can be ordered. That is, firstly if the tenant applies for such an order; and secondly, s 95 applies if the matters set out in subsection (1) is satisfied. The reference to “if this section applies” in (b) only relates to the matters is subsection (1) being satisfied and does not include any reference to subsection (3).
Subsection (4) makes no reference to ordering a rent decrease if a finding is made that only sub-section (3) is satisfied. Section 94(4) says that both 94(4)(a) and s 94(4)(b) have to be satisfied before the Tribunal can make an order reducing the rent. In Underwood, although the Court seemed to proceed on the assumption there was a power to reduce rent contained in sub-section (3), the interaction between sub-section (3) and (4) was not specifically addressed other than to say that it was not obvious what was to happen if sub-section (1) did not apply.[11]
[11]Underwood v Queensland Department of Communities (State of Queensland) supra at para [2]; also see paragraphs [27], [28], [32] and [33].
The next question is, once loss of amenity or a decrease in the standard of the premises is established, whether the Tribunal can order a lump sum payment by way of rent reduction over a period of time as occurred here. Part 2 of the Act refers to “Rent”. Division 1 of Part 2 deals with Residential Tenancy Agreements. The various sections in this Division, which are incorporated into the residential tenancy agreement by virtue of s 52, deal with such things as how rent is to be paid; where rent is to be paid; payment of rent in advance; increases of rent; record keeping; prohibition on seizure of goods for payment of rent and of course rent decreases. Division 1 does not make any reference to compensation for the condition of the premises rather contemplates that any reduction in the livability, amenity or standard of the premises is not necessarily as a result of any fault on the part of the lessor. This is expressly referred to in sub-section (1).
All s 94 permits, upon application, is a decrease of rent for a specific amount rather than lump sum compensation calculated by the amount of the rent reduction and the period of time over which the amenity or standard of the premises has been decreased. Here it was for a rent reduction of $110/wk for 52 weeks. The section contemplates that if there is a change in the livability, amenity or standard of the premises, absent agreement between the lessor and the tenant as to the amount of the reduction, a tenant would make application to the Tribunal for an order decreasing the rent and presumably that rent would continue for the remainder of the term or until the premises are brought up to the standard they were an the commencement of the tenancy.
By contrast if the reduction in livability, amenity or standard of the premises is as a result of a lessor’s breach of the tenancy agreement, the tenant has a right of action for an order from the Tribunal under s 419 of the Act. That section applies if there has been a breach of a term of the residential tenancy agreement and under s 420 the Tribunal can order compensation for the breach. Obviously the cause of action arises when the lessor is in breach, but s 419 stipulates that the application must be made within six months of the tenant becoming aware of the breach. This of course makes good sense and it is to ensure that a tenant cannot continue to stay in the premises knowing the lessor is in breach and then at some time in the future, even after the premises are vacated, then bring a claim for compensation. The quantum of the lump compensation for any breach can, no doubt, be calculated on the basis of a rent being reduced by a certain amount multiplied by the period of time the tenant has been subject to the reduction of amenity or standard of the premises.
It follows that the Act makes specific provision for rent decreases if the criteria set out in s 94(1) and (2) are satisfied and for compensation if it is found that the lessor is in breach of the tenancy agreement. Section 94 does not provide for compensation by way of a lump sum in the way adopted by the Tribunal at first instance. However, I see no reason why an applicant could not make an application under both sections at the same time. A rent reduction under s 94(3) and compensation for breach under s 419 over the period of time the amenity or standard has been reduced, provided the lessor has been given notice of the breach.
Therefore, in the absence of: any finding of fact as to whether the amenity or standard of the premises was decreased substantially to satisfy sub-section (3); the finding that the lessor breached the tenancy agreement by failing to address the mould issue; and the uncertainty as to whether s 94 actually gives the Tribunal a power make a rent reduction if sub-section (3) is satisfied; I have come to the conclusion that the only basis upon which the Tribunal could have awarded compensation was under s 419 on the basis of the facts found by the learned Adjudicator.
That being the case the 6 month limitation within which to bring the claim under section 419(3) must apply. On the facts as found by the learned Adjudicator Mr Donker’s application for compensation by way of rent decrease was out of time and his application should have been dismissed.
It follows that there is an error of law in the primary decision and leave to appeal must be granted. For the reasons stated the appeal must succeed. The orders will be that leave to appeal will be granted, the appeal allowed. The decision made on 20 April 2012 will be set aside and instead will be an order that the applicant pay to Mr Donker’s $170.00 being the cost of the emergency repairs.[12]
[12] QCAT Act, s 146.
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