McFarlane v Department of Transport and Main Roads - [2014] QCAT 284

CITATION:

McFarlane v Department of Transport and Main Roads [2014] QCAT 284

PARTIES:	Wendy McFarlane (Applicant)
v
Department of Transport and Main Roads (Respondent)

APPLICATION NUMBER:

MCDT0353/14

MATTER TYPE:

Residential tenancy matters

HEARING DATE:

9 May 2014

HEARD AT:

Brisbane

DECISION OF:

Dr Collier, Justice of the Peace, Presiding
Mr Kirby, Justice of the Peace

DELIVERED ON:

10 June 2014

DELIVERED AT:

Brisbane

ORDERS MADE:

The Respondent is to pay the Applicant $3,877.65 within 28 days.

CATCHWORDS:

MINOR CIVIL DISPUTE – RESIDENTIAL TENANCY MATTER – where application filed in excess of six months from when the tenants became aware of the lessor’s breach – where no power to extend time

MINOR CIVIL DISPUTE – RESIDENTIAL TENANCY MATTER – loss of amenity – rent reduction – compensation – time limits;

Residential Tenancy and Rooming Accommodation Act 2008 (Qld) s 419

APPEARANCES and REPRESENTATION (if any):

APPLICANT:

Wendy McFarlane

RESPONDENT:

No Appearance

REASONS FOR DECISION

Initiation of the Dispute

The substantive matter here concerns a non-urgent Application for Minor Civil Dispute dated 6 February 2014 for compensation to be paid to the Applicant by the Respondent resulting from the Respondent’s alleged failure to maintain a pool at the property rented by the Applicant from the Respondent at 76 Gem Rd Kenmore in Brisbane. As part of the ongoing proceedings in this matter the Applicant also sought an order of the Tribunal requiring the Respondent to produce certain documents by an Application for miscellaneous matters dated 6 February 2014.
In respect of the Application for miscellaneous matters, dated 6 February 2014, the Tribunal made two Orders on 21 March 2014. The first refused the request for the production of documents. Order 2 said: ‘Both the Applicant and Respondent are to file and serve all documents they intend to rely upon by Monday 24 March 2014 at 4pm’.
The substantive matter was first brought on for hearing on 26 March 2014. On the scheduled hearing date the QCAT Registry received two affidavits from authorised officers of the Respondent: Grahame Hansen, Principal Legal Officer of the Department of Transport and Main Roads (TMR); and Katrina Birrell, Acting Coordinator (Residential Property) of Infrastructure Property Management TMR. Both affidavits contained statements to the effect that the Respondent was not aware of the substantive dispute, or the details of the substantive dispute, and was not previously aware of the hearing scheduled for 26 March 2014.
The Tribunal, through the Principal Registrar, made orders dated 26 March 2014 to the effect that the matter was to be adjourned for not less than 21 days, and that the parties were to comply with Order 2 of the Tribunal’s decision dated 21 March 2014 concerning the serving and filing of relevant documents. The matter was later scheduled for hearing on 9 May 2014. The QCAT file discloses no documents having been filed by either party between the date of the original Order and the date of this hearing.

Absence of the Respondent

The affidavit dated 26 March 2014 of Katrina Birrell, an authorised officer of the Respondent, confirms that the Respondent received a copy of the original Application for Minor Civil Dispute dated 6 February 2014 in this matter not later than 25 March 2014. In her affidavit she said, ‘On 25 March 2014 at 3.30pm, I received an email from Enquiries at QCAT, signed by Kayana, attaching the Application for Minor Civil Dispute’. In this sworn statement by Katrina Birrell it is clear that, on 25 March 2014, the Respondent had a copy of the initiating process, the Application for Minor Civil Dispute. By this date, at the latest, the Respondent was aware of the existence, and the nature and substance, of the dispute. This is sufficient to satisfy the requirements of rule 41 of the Queensland Civil and Administrative Tribunal Rules 2009 (Qld) (QCAT Rules) permitting informal service.
The QCAT file disclosed that the Respondent was served with a Notice of Hearing in this matter dated 24 April 2014 which would have been received by it not later than 29 April 2014. The Tribunal also noted that the Respondent had been served at the postal address which it had requested that the Applicant and the Tribunal use for service of documents.
The Tribunal concluded that the Respondent had been given proper notice of the present hearing and understood the substance of the claim it faced. In accordance with section 93(1)(a) of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act), the Tribunal was satisfied that it was fair and just to hear the matter in the absence of the Respondent.
This matter was heard in the absence of the Respondent.

The Substantive Claims

The Applicant entered into a lease with the Respondent to occupy residential premises at 76 Gem Road Kenmore in Brisbane commencing 29 July 2011. The premises contained a swimming pool. The rent paid by the tenant was market-rate rent at all relevant times.
Evidence presented to the Tribunal disclosed that the Applicant was a good tenant who met her tenancy obligations including the regular payment of rent.
The Applicant presented as a witness of truth and credit.
The Respondent offered no evidence to the Tribunal.
From 29 July 2011, when the Applicant first occupied the premises, until approximately 1 November 2013, the swimming pool pump at the premises failed to operate satisfactorily. As a result of these problems, the pool was unusable by virtue of not being properly filtered and hence contained algae and other organic products. In addition, the state of the pool rendered much of the rear portion of the premises unusable by the Applicant because of an unpleasant odour arising from, and the unpleasant look of, the pool. The date on which effective repairs to the pool were completed satisfactorily by the Respondent is uncertain, but was not earlier than 1 November 2013.
Shortly after she commenced her tenancy the Applicant made a complaint about the pool to the Respondent. When the Respondent failed to remedy the problems the Applicant continued to complain to the Respondent; these continuing problems and complaints became a source of antagonism between the parties.
As a result of this loss of amenity the Applicant commenced proceedings in regard to this matter in the Tribunal on 6 February 2014. In her Application for Minor Civil Dispute the Applicant sought an order from the Tribunal that the Respondent pay her $4,079.25 comprising four components:
a) $3,700.00 being reduced rent payable for 74 weeks at $50 per week as provided in s 169 of the Residential Tenancies and Rooming Accommodation Act 2008 (Qld); and
b)    $76.25 being for parts she had purchased in an attempt to remedy the pool problems; and
c)    $303.00 being reduced rent payable for 62 weeks at $5.00 per week from 27 November 2012 to 1 February 2014; and
d)    Rent reduction of $5.00 per week between 27 November 2012 and 1 February 2014 based on the rent increase applied during that period.
In respect of claim a), rent reduction is normally applied prospectively to rent rather than being claimed by an applicant as a retrospective lump sum. If this claim is to proceed, it has to be treated as a claim for compensation by the Applicant arising from loss of amenity as a result of loss of amenity at the premises resulting from the pool problems. In the interests of justice and fairness the Applicant’s claim will be treated as one for compensation.
Claim b) would be justified in the event that the Applicant had been entitled to attempt to effect urgent repairs in order to restore the pool to a useable state, or in an attempt by the Applicant to mitigate her loss.
Claims c) and d) are claims for rent reduction based on the same pool problems to which claim a) relates. These two claims may be relevant to an allegation by the Applicant that the rent being paid is above the market rate (if she cared to make such a claim), but they cannot stand together with claim a) because, if she were to succeed in claim a) as well as in claims c) and d), she would be compensated twice for the same loss, namely the loss of amenity arising from the pool problems. Therefore claims c) and d) are not allowed, and are, effectively, subsumed into claim a).

Factual Findings

The pool at the premises rented by the Applicant was unusable by virtue of not being properly filtered rendering the pool and much of the rear area of the premises, being the rear outdoor area, unusable. As a result the Applicant suffered loss and damage arising from the failure of the Respondent to maintain the pool in good repair between 29 July 2011 and 1 November 2013, a total of 117 weeks.
The Applicant was paying market rent at all times for premises that included a pool. Her rent was $460 per week between 29 July 2011 and 27 November 2012, and thereafter $465 per week.
The Applicant argued that the value of the loss of amenity she suffered arising from the inability to use the pool and much of the rear area of the property for the 117 weeks involved amounted to $50 per week. In view of the rent being paid by the Applicant and the extent of the loss of amenity this appears to be a reasonable estimate of her loss. For 117 weeks this amounts to $5,850.00.
In her application the Applicant claimed a loss of $3,700.00, amounting to compensation for 74 weeks rather than the 117 weeks found by the Tribunal. The Applicant indicated at the hearing that she would be satisfied to receive the lesser amount set out in her claim rather than the larger amount arising from the loss and damage incurred over 117 weeks.
The Tribunal is satisfied that, if the Applicant is entitled to compensation for loss of amenity, this amounts to $3,700.00.
The Tribunal is satisfied that, if the Applicant is entitled to compensation for money spent in attempts to effect repairs to the pool, this amounts to $76.25.
In accordance with the RTRA Act s 325 the Applicant issued a Form 11, Notice to Remedy Breach, on the Respondent dealing with the pool problem on 3 July 2013.
In accordance with the RTRA Act s 402 the Applicant issued a Form 16, Dispute Resolution Request, with the RTA on 5 August 2013. A further amended version of the Dispute Resolution Request was submitted to the RTA by the Applicant on 20 September 2013. For the purpose of this application, there is no material difference between those applications to the RTA.
The RTRA Act s 416 requires that a Form 16, Dispute Resolution Request, must be lodged with the RTA and conciliation come to an end in accordance with the terms of s 416 before a party may make an application to the Tribunal about an issue under the RTRA Act.
The Applicant received the decision of the RTA in respect of her Dispute Resolution Request concerning the pool problem from the RTA on 4 October 2013 which reads, in part: ‘The dispute between you and Department of Main Roads and Transport – Property relating to 76 Gem Rd KENMORE QLD 4069 could not be resolved through the Residential Tenancies Authority’s (RTA) dispute resolution process’.

Legal Conclusions

In her application the Applicant sought a remedy by claiming a rent reduction. The basis of this remedy is found in s 94 of the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (RTRA Act).
There are two possible bases on which the Applicant may be entitled to a remedy in this matter:
a) Within the terms of s 94 of the RTRA Act (dealing with rent reduction); or
b) Within the terms and conditions of the tenancy agreement.
Section 94 of the RTRA Act cannot be used to obtain lump sum compensation for loss of amenity arising out of a breach of the tenancy agreement. There is a line of authority on this point, the latest being: Campbell v Donker [2013] QCATA 6[1]. Therefore the Applicant cannot succeed in her principal claim, being claim a), under this provision. This leaves the terms of the tenancy agreement as providing the only possible remedy.
[1]The principle in this instance has also been affirmed by the Queensland Court of Appeal in Underwood v Queensland Department of Communities (State of Queensland) [2012] QCA 158.
The tenancy agreement between the parties in this case comprises three parts:
a)    Form 18a, General Tenancy Agreement, including Special Terms, dated 29 July 2011;
b)    Additional Special Terms; and the terms to that General Tenancy Agreement; and
c)    the conditions relating to State tenancy agreements contained in Schedule 3 of the Residential Tenancies and Rooming Accommodation Regulations 2009 (Qld) (RTRA Regs).
The General Tenancy Agreement including Special Terms and the Additional Special Terms contain no terms that are material to this application.
Schedule 3 of the RTRA Regs, Part 2, sub-section 23(2) says: ‘While the tenancy continues, the lessor must maintain the premises in good repair’.
The Tribunal has found as fact, noted in Clause [19] above, that the Respondent had failed to maintain a portion of the premises in good repair and has, therefore, breached the tenancy agreement. As a result of this breach the Applicant is entitled to a remedy providing she has applied to the Tribunal within the time limit parties have to commence a claim as stipulated in s 419 of the RTRA Act.

Time Limitation

Breach of a tenancy agreement is an instance of a breach of contract. In the absence of any other factors an aggrieved party would have six years in which to commence an action from the date on which the cause of action arose[2].
[2]Limitation of Actions Act 1974 (Qld) s 10.
However, in the RTRA Act there are two provisions that affect or alter this time limit.
Provision 1 - Conciliation
First, an aggrieved lessor or tenant may request the RTA to undertake conciliation in an attempt to resolve a tenancy dispute: RTRA Act s 402.
Unless the RTA believes that the dispute is not suitable for conciliation, the RTA must commence the conciliation process as soon as practicable after receiving the dispute resolution request: RTRA Act s 403.
After the conciliation process has been concluded, and only then, may a party apply to the Tribunal for relief. Sub-s 416(1) provides that a non-urgent application under the RTRA Act to a tribunal may be made
about an issue only if the applicant has first made a dispute resolution request about the issue to the RTA and:-
a) the conciliation process has ended without a conciliated resolution having been reached, because—
(i) the authority refuses to provide a conciliation service about the issue; or
(ii) a party refuses to participate, or continue to participate, in the conciliation process; or
(iii) the parties participate in the conciliation process but do not reach an agreement on resolving the dispute; or
b) a conciliated resolution is reached but the applicant reasonably believes the other party has breached the conciliation agreement.
Section 416 therefore imposes a condition precedent on an applicant to the effect that a proceeding may not be commenced in a non-urgent application until the issue between the parties has been conciliated by the RTA.
Provision 2 – Limitation Period
Second, sub-s 419(3) requires that an ‘… application must be made within 6 months after the lessor or tenant, or provider or resident, becomes aware of the breach’.
This provision requires that an applicant must commence proceedings within 6 months after becoming aware of the breach.
The issue now becomes: how do these two provisions interact, and when does the period of limitation begin to run?
Determining When the Limitation Periods Begins to Run
In a non-urgent case, such as this one, an aggrieved party may not apply to the Tribunal for a remedy until:
a) the matter has been referred to the RTA for conciliation; and
b) conciliation has been undertaken; and either:
i.the parties have been notified by the RTA that a resolution cannot be reached; or
ii.the parties reach an agreement, but the applicant reasonably believes that the conciliated agreement has been breached.
An applicant necessarily incurs additional delay through the RTA conciliation process which, if the time limitation period in sub-s 419(3) is applied as if it runs from the date when a problem first becomes known to the applicant, will eat into the 6 month limitation period available to the applicant to commence proceedings. Indeed, in some cases, the time taken to complete this process could consume most or all of the time limitation period. This means that, if the 6 month time limitation is construed strictly as commencing as soon as an applicant becomes aware of a problem, an applicant may be left bereft of a remedy through no fault of their own. This result cannot have been intended.
The 6 month limitation allows only a limited window of time in which an aggrieved party may commence an action, and it is strictly applied. The time limit cannot be extended by the Tribunal. It is, therefore, a condition that could be exploited by a dilatory or careless party by undertaking negotiations, whether in good faith or otherwise, to remedy a problem with an aggrieved party and then allowing those negotiations to drag-on for many months, or to make promises as to remedy that can take many months to occur, if at all. It becomes in the interest of a dilatory or careless party not to remedy defects – by doing so they can save the cost and effort involved in remediation and, if the problem is not rectified within the relevant 6 month period, the party suffering the loss and damage arising from the problem could lose any prospect of compensation under s 419 while the malfeasor no longer has to be concerned with remedying the problem as their risk of liability for the problem has ended. Again, this cannot be the intended effect of sub-s 419(3).
There are numerous occasions when the Tribunal has disallowed claims founded on a breach of s 419 on the basis that the claims were not made within the 6 month time limit, the latest of these being Masinello v Parker & Anor (No 2) [2013] QCATA 325, Bauer v McMillan & Anor [2013] QCATA 140, and Campbell v Donker [2013] QCATA 6. These decisions affirm that the time limit must be strictly applied, and that the Tribunal has no flexibility to alter this time limit. I respectfully agree with the view of the respective decision-makers in this regard. But in none of these matters, nor in any earlier matters, have the learned decision-makers considered in depth the meaning of the words in sub-s 419(3) ‘…after the lessor or tenant, or provider or resident, becomes aware of the breach’. The issues in this matter therefore become: when did the relevant party become aware of the breach; and what was the relevant breach of which the relevant party had to become aware?
As the learned Senior Member said in Campbell v Donker [2013] QCATA 6 at [28], which summarises the general view as to the effect of s 419(3):
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.
However, strictly applied as if the limitation in sub-s 419(3) started to run from the moment an aggrieved party became aware of a problem in a tenancy, the parties would, in many cases, have quite limited scope for negotiations and an opportunity to remedy the problem. Because the time limit is so brief, and because it is so strict, and because the Tribunal has no ability to extend it, knowledge of the breach for the purposes of sub-s 419(3) cannot be said to arise at the moment that a party first becomes aware of a problem.
Because the time limitation is so brief, and because it is strictly construed against an applicant or potential applicant, the date on which it begins to run must allow the applicant or potential applicant the full benefit of the time limitation period and should not be construed so strictly that it can be defeated easily by a malfeasor or a dilatory or careless respondent or potential respondent.

On a proper construction of the meaning of sub-s 419(3), in the case of a non-urgent application, the date on which a relevant breach occurs, and from which the 6 month time limit to commence a proceeding begins to run, is when the RTA advises the parties of the outcome of the conciliation under the RTRA Act ss 402, 403 and 416. Only after this action by the RTA can an aggrieved party commence a proceeding in a non-urgent matter: RTRA Act s 416.
This means that, while a breach of a lease agreement may commence immediately a problem arises, and compensation for the loss and damage arising from such a breach may be calculated from the date on which the problem, or breach, first arose, an applicant does not have a right to commence proceedings until all the conditions precedent are satisfied. Therefore, for the purposes of RTRA Act sub-s 419(3), an aggrieved party ‘… becomes aware of the breach …’, and the cause of action arises, on that day when the RTA publishes the decision it is required to make under RTRA Act, and the limitation period prescribed in sub-s 419(3) runs from that date.
This test is consistent with the general approach adopted by the Tribunal and the courts as enunciated by the learned Senior Member in the quote in [44] above: it provides certainty to all the parties; and it does not permit claims on an open-ended basis.
This approach to determining the relevant date on which a breach occurs for the purposes of sub-s 419(3) is consistent with the intent of the RTRA Act and the QCAT Act, which both encourage parties to resolve disputes by negotiation, conciliation, or mediation, with legal proceedings being used as the last resort.
If the relevant date of the breach is taken to be earlier than the test posited in [47] this may well require a party suffering from any problem under a tenancy agreement to lodge a dispute resolution request with the RTA at an early time, and then commence action immediately or shortly after the RTA publishes the results of the conciliation in order to preserve their position, potentially before any attempt to negotiate a resolution of the problem giving rise to the breach has occurred.
Likewise, if the relevant date of the breach is taken to be earlier than the test posited in [47], it is in the interest of a party who could otherwise be obliged to remedy a problem to be dilatory and negotiate in bad faith, knowing that time is running against the aggrieved party.

Conclusions

Returning to the instant matter, while the pool problem was present at the beginning of the tenancy, this is not the date on which the relevant breach occurred. For many months, indeed for over two years, the Applicant was negotiating with the Respondent to have the problem remedied. The Respondent may have remedied the problem at some points during this period, however briefly, as it attempted to remedy the problem, however dilatory its attempts may have been. Therefore most of this period is not relevant to the date on which the relevant breach for the purpose of RTRA Act sub-s 419(3) occurred.
Nor did the relevant breach occur in this case when the Applicant felt that she had to make stronger representation to the Respondent in an attempt to have the pool problem remedied. It is irrelevant as to the form any complaint was made to the Respondent; complaints were styled variously as “Formal Letter of Demand Notice”, “Formal demand for rent reduction…”, and in numerous emails covering the pool problem.
The Applicant negotiated personally with the Respondent continuously from shortly after the date on which she first occupied the rental property on 29 July 2011 until at least 29 January 2014 when she wrote to the Respondent a letter of demand. As personal negotiations did not resolve the dispute, she sought a remedy by sending the Respondent a Form 11, Notice to remedy breach, on 3 July 2013 dealing with the pool problem. On 5 August 2013 she filed with the RTA a Form 16, Dispute resolution request, again dealing with the pool problem. By letter dated 4 October 2013 the RTA advised the Applicant that ‘The dispute between you and the Department of Main Roads and Transport relating to 76 Gem Rd KENMORE QLD 4069 could not be resolved through the Residential Tenancies Authority’s (RTA) dispute resolution process’.
Based on this course of negotiation and correspondence, the Tribunal concludes that the date on which the Applicant becomes aware of the breach for the purposes of RTRA Act sub-s 419(3), and from which the 6 month time limit to commence proceedings began to run, was 4 October 2013, the date when the parties were sent the letter from the RTA advising them that the RTA dispute resolution process had been unable to resolve the dispute. The Applicant filed and served her Application for Minor Civil Dispute on 6 February 2014. Therefore the Applicant made her application within 6 months after she became aware of the relevant breach and is entitled to a remedy.
The Tribunal is satisfied that the Applicant is entitled to compensation for the loss of amenity that arose from the failure of the Respondent to remedy the pool problem on the basis that the Respondent breached the lease agreement.
The Tribunal is also satisfied that the Applicant is entitled to recover the money she spent in her attempts to effect repairs to the pool filter on the basis that this was an attempt by her to mitigate her loss in this matter.
Pursuant to Rule 83 of the QCAT Rules the Tribunal may order the Respondent to pay to the Applicant the amount of any prescribed fee paid by the Applicant on filing the application for the proceeding. The prescribed fee in this case is $101.40. Because the Applicant has succeeded in her application it is the decision of the Tribunal that it is fair and just that the Respondent pay the Applicant $101.40 being the filing fee in this matter.

Decision

The Respondent is responsible for the loss and damage suffered by the Applicant arising from the failure of the Respondent lessor properly to maintain the property tenanted by the Applicant.
The Applicant is entitled to:
a)    Compensation of $3,700.00 for loss of amenity arising from the Respondent’s breach of the lease agreement; and
b)    $76.25 being for parts she purchased in an attempt to remedy the pool problems in order to mitigate her loss; and
c)    $101.40 being her filing costs.
It is ordered that the Respondent pay the Applicant $3,877.65 within 28 days.