Novais v Raine & Horne Wynnum Manly
[2016] QCAT 457
•28 November 2016
CITATION: | Novais v Raine & Horne Wynnum Manly & Anor [2016] QCAT 457 |
PARTIES: | Ricardo Jorge Novais |
| v | |
| Raine & Horne Wynnum Manly (Respondents) | |
APPLICATION NUMBER: | MCDO1042-16 |
MATTER TYPE: | Other minor civil dispute matters |
HEARING DATES: | 19 July 2016; 22 August 2016 |
HEARD AT: | Brisbane |
DECISION OF: | Adjudicator Bertelsen |
DELIVERED ON: | 28 November 2016 |
DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. The application is dismissed in its entirety. |
CATCHWORDS: | Residential tenancy – efficacy of tenancy agreement – condition of premises – tenant damage – fair wear and tear – manager’s obligations |
APPEARANCES: | |
APPLICANT: | Ricardo Novais Matthew Kim, Solicitor – Sung Do Laywers |
RESPONDENT: | Jody Ashton, Property Manager |
REASONS FOR DECISION
Application
By application filed 18 May 2016, Ricardo Jorge Novais sought $25,000.00 as compensation for abandonment of property from Raine & Horne Wynnum Manly (‘Raine & Horne’) and Henry Chiang as managing agent and tenant respectively, of premises 23 Gabrielle Place, Manly West on account of damages he asserted were occasioned to that premises during the course of the tenancy from 23 September 2013 to 22 March 2015.
Background and evidence
On 18 September 2013, Raine & Horne received a residential tenancy application from Mr Chiang. In that application, under the heading ‘Current Address’ Mr Chiang stated his reason for leaving as ‘looking for a property for company’. In the same application under the heading ‘Employment Confirmation Request’ one Lucas Chung stated ‘Mr Chiangs [sic] current tasks are [sic] renting a house for the company for accommodating our VIP guests in the future and he will also be managing the house on our behalf’. Reference checks were conducted in respect of Mr Chiang. According to Ms Ashton of Raine & Horne, she sent that application to Mrs Novais who conducted leasing matters on behalf of her husband. She stated that: Mr Chiang wished for the tenancy to be in the name of a company Top Level Trading Co Ltd; that Mrs Novais, on behalf of Mr Novais, was eager to rent the premises as quickly as possible; that, in fact, she was desperate to find a tenant as she was pregnant and travelling overseas and that she approved the application for the tenancy to commence with the company as tenant. Ms Ashton said a particular incentive for Mrs Novais was that rent would be paid four weeks in advance.
A general tenancy agreement dated 23 September 2013 for the period 23 September 2013 through 22 September 2014 was entered into by Raine & Horne on behalf of Mr Novais nominating Top Level Trading Co Ltd as tenant. The rent was $1,250.00 per week, with a bond paid of $5,000.00. The number of persons to reside in the approximately seven year old large premises was four.
It did not appear to be in contention that rent was paid. Rather, it was asserted that routine quarterly inspections were not carried out during the course of the first tenancy. Mrs Novais stated in her affidavit she attended an inspection with Ms Ashton on 1 February 2014, at which time it was discovered there were at least 20 tenants living at the premises. Double bunks were observed at the premises. She said she sought Ms Ashton’s advice regarding continuity of the rental and that based on Ms Ashton’s statements about supply of rental properties exceeding demand, she decided to convince her husband not to evict.
Subsequently, a second general tenancy agreement dated 22 September 2014 for the period 23 September 2014 through to 22 March 2015 was entered into by Raine & Horne on behalf of Mr Novais, nominating on this occasion a company Top Level Pty Ltd as tenant. The rent remained constant at $1,250.00 per week with the bond at $5,000.00. The number of persons to reside in the premises was again nominated as four. Mr Chiang signed both tenancy agreements on behalf of the tenant.
Mr Kim on behalf of Mr Novais said that notification of the tenant’s intention to leave was only given on about 16 March 2015. It did not appear to be in contention that the premises was vacated about, or shortly prior to, 23 March 2015.
On 27 March 2015, Petrece Donovan of Raine & Horne wrote to Mr Chiang at an email address styled ‘TopHenry’ saying that an exit report had been conducted at the premises and that there were outstanding issues. These were that the premises had not been cleaned, garden not maintained, fridge handles broken, strong cigarette smoke odour, yellow stained walls, belongings left behind, carpets not cleaned, outstanding rent and finally a broken blind in the master bedroom.
Mr Kim said the damage was much more being constituted by the estimated cost of carpet replacement at $7,572.00, shutter blind at $3,640.00, repairs being induction and gas cook top at $4,990.00, wall canopy hood at $3,299.00 and integrated dishwasher at $2,599.00 a total of $10,888.00 as well as painting at $4,950.00 and kitchen repairs at $2,050.00.
The bond of $5,000.00 was apparently paid out by the RTA partly to or on account of Mr Novais and applied towards rent and other expenses at the time of vacate. That appeared to be so according to the tenant ledger produced. It was not made clear as to what portion of the bond was paid to Mr Novais. Shortly subsequent to vacate, Mr Chiang seemed willing to forfeit the whole of the bond on account of post-tenancy issues if that was necessary. However, there was no evidence of any conciliation being attempted or conducted with the RTA at the time or since.
Mr Kim pointed out that the entity named as tenant on the second general tenancy agreement, Top Level Pty Ltd was in fact a company deregistered on 13 October 2012. He asserted: that Raine & Horne did not take reasonable steps to ensure the accuracy of the tenant’s identity for the second general tenancy agreement; that Raine & Horne was obliged to ‘see if the company is a bankrupt company or whether it’s deregistered or not’; that ASIC and Google searches would have confirmed Mr Chiang’s employment at Top Level Pty Ltd was deceitful. He said there was a failure to provide an entry condition report, or an exit condition report.
Mr Kim said not all bond money was returned to Mr Novais, that some of the bond money was returned to Mr Chiang and that such was a breach of the agent’s code of conduct[1] to act honestly, fairly and professionally in the conduct of a real estate business. He said Mr Chiang lived in the premises for the whole of the tenancy, one and a half years.
[1]Property Agents and Motor Dealers (Real Estate Agency Practice Code of Conduct) Regulation 2001 (Qld).
Ms Ashton said: that there was always a risk in renting; that she always suggested that insurance be taken out and, in fact in respect of this tenancy, recommended landlord’s insurance; that the tenant in this instance had fulfilled its obligations to the owner and left the property in a clean order, taking into consideration some wear and tear. She said: there were at least three routine inspections per year in accord with the ‘20(a) agreement’; that it was Mrs Novais who wanted to extend the tenancy with a second general tenancy agreement against Raine & Horne’s advice; that Mrs Novais listed the premises on the internet for rent but that when she failed to find a tenant ‘she opted to give the tenants an extended period knowing that they’ve got those people in the property, accepting liability’.
Sometime later on 25 September 2015, Mr Kim, Sung Do Lawyers, on behalf of Mr Novais, wrote to Raine & Horne alleging damage to the premises in the sum of approximately $40,000.00. He asserted breaches of the agent’s code of conduct in that Raine & Horne did not act in the client’s best interests, lack of reasonable skill, care and diligence, failure to inform the client of all developments, unconscionable conduct and misleading or deceptive conduct. He said there was a failure to ascertain the true identity of the tenant; that 20 people occupied the premises; that there was a failure of regular inspections and that no exit condition report was provided; all of which had lead to damages of some $40,000.00. Prior to that on 31 August 2015, Sung Do Lawyers had written directly to Mr Chiang making the same $40,000.00 monetary claims. Some days later Mr Kim again wrote to Raine & Horne enclosing a quotation for more repairs in the sum of $16,482.00. Ms Ashton indicated that she thought all post-tenancy issues pertaining to Gabrielle Place were since finished with; that it was a surprise to have the owners’ damages allegations to come out of the blue in September 2015. In the meantime the owners had moved back in.
An unsigned entry condition report was produced to the Tribunal, but no exit condition report, other than perhaps Ms Donovan’s email of 27 March 2015 setting out the issues requiring attention post-tenancy.
A routine condition report by Norma Hiles of Raine & Horne dated 25 February 2014 was produced to the Tribunal. It listed the condition of the premises in all respects to be visually satisfactory. Ms Hiles was a property manager at Raine & Horne:
When the tenant Henry leased 23 Gabrielle Place and resided at the property. The tenant had the house cleaned on several occasions by cleaners, and the owner Julie on inspection of the house didn’t think it was good enough. I also had the owner’s mother-in-law inspect the property on behalf of the owner as they were overseas. The owners were aware of the number of people living in the house as the guy who serviced the pool had told the owners and Ricardo rang me requesting an inspection. On my last inspection there was no damage evident and after constant complaints by the owners the tenant decided to vacate.
A routine condition report by Dempsey Trinder of Raine & Horne dated 18 December 2014 was produced to the Tribunal. It listed the condition of premises in all respects, bar one, to be visually satisfactory. The walls were noted as starting to yellow in parts. Mrs Novais said she attended ‘an inspection with Ms Jodie Ashton of Raine & Horne Wynnum Manly on 1 February 2014’. Petrece Donovan of Raine & Horne said ‘in regards to the exit inspection: the owner was present at this inspection and we carried out more than one…’ She said the owner was not happy with the cleaning of the property, nor the gardening in particular; that the owners moved back into the premises and that ‘months later letters were received by our office from solicitors taking matters further’.
Conclusions
This claim was initially filed as an application for Minor Civil Dispute – Residential Tenancy dispute, nominating both Raine & Horne Wynnum Manly and Henry Chiang as respondents.
The first general tenancy agreement nominated Top Level Trading Co Ltd as tenant. Whether that company was registered or not at the time was never made clear. It does seem clear, however, that Mr Chiang entered into that agreement on behalf of that company. The second general tenancy agreement nominated Top Level Pty Ltd as tenant. At the time that company was deregistered, but once again it seems clear that Mr Chiang entered into that agreement on behalf of that deregistered company. It was asserted that failure to carry out an ASIC search at the time was unprofessional.
Raine & Horne was given authority to manage the rental of the Gabrielle Place premises. That was as far as it went. Obligations imposed on Raine & Horne were about management of the property and did not contemplate a verification exercise as to the efficacy of registration of a corporate entity. Reference checks in respect of Mr Chiang were conducted at the outset. The Tribunal is satisfied that sufficient enquiries were made regarding the initial tenant Top Level Trading Co Ltd and Mr Chiang. It does not follow that because the tenant was not Top Level Pty Ltd that by default it is Mr Chiang.
How it came to be that the second tenancy nominated Top Level Pty Ltd as tenant was not made clear. There was no evidence to support the contention that Mr Chiang had been deceitful, rather only an assumption that his conduct must have been tainted given the deregistered status of Top Level Pty Ltd. Nor can it be concluded based on the limited evidence that Mr Chiang becomes personally liable as if he were the tenant named in the second tenancy agreement.
As far as the assertion that at least 20 persons occupied the premises, there was no evidence placed before the Tribunal as to how that number was calculated. At best it seems referrable to the observation of double bunks within the premises at the time of Mrs Novais’ inspection with Ms Ashton on 1 February 2014. What is clear is that Mrs Novais, according to her affidavit, took Ms Ashton’s advice regarding retention of the incumbent tenant, despite the number of occupiers exceeding that stated in the first tenancy agreement. Her decision to do so was based on Ms Ashton’s advice of supply of rental properties exceeding demand at the time. Mrs Novais acquiesced in the continuity of the tenancy at the time fully aware of the excessive number of persons residing in the premises. There was no evidence that Ms Ashton’s advice was misleading or self-serving.
As far as routine inspections during the course of the tenancy are concerned, the Tribunal is satisfied that a number of routine inspections did take place during the course of the tenancy.
At the least, routine inspections took place on 1 February 2014, 25 February 2014, and 18 December 2014. Whilst Raine & Horne’s attention to the premises may not have been stellar it was adequate enough. Routine inspections are in the nature of checks over a period of time to discern whether there is any obvious breach of an ongoing tenancy agreement e.g. anything that could be construed as obvious damage and not fair wear and tear. Routine inspections because they take place whilst the premises is lived in, furnished and subject to day to day conditions would not and mostly do not identify the sorts of issues that might become apparent once a premises is vacant e.g. marks on walls behind pictures and indentations or scratches on polished floors under furniture or rugs. The Tribunal accepts that as at 18 December 2014 some three months prior to vacate the condition of the premises was assessed visually as overwhelmingly satisfactory.
It was asserted that some of the bond money was returned to Mr Chiang and that such was a breach of the Agent’s Code of Conduct. Some of the bond was utilised by Raine & Horne for, it appears, rent, cleaning and gardening before any portion was returned to Mr Chiang. Expenditure of the bond on these sorts of post-tenancy issues is normal enough. That would be within the usual purview of an agent’s authority to manage. How that constituted a failure to act honestly, fairly and professionally was not evident. If Raine & Horne returned a portion of the bond, or allowed a portion of the bond to be returned to Mr Chiang before all post-tenancy issues were identified and attended to, that no doubt would have been a mistake on Raine & Horne’s part, but only to the extent of the portion of the bond so dispersed.
It was asserted that the premises was abandoned. That is not the case. Notification of the tenant’s intention to leave was given on 16 March 2015. The tenancy was due to expire on 22 March 2015. Vacate took place at the latest on 23 March 2015. The tenant should have given two weeks’ notice. Only one week’s notice was given. In any event, there was no rental arrears component listed in the claim.
Demand was first made on Mr Chiang in respect of damage to the premises on 31 August 2015. That was followed by a demand on Raine & Horne on 25 September 2015.
There was no evidence of any conciliation being attempted or conducted with the RTA consequent upon vacate or since; not even any evidence that the damage asserted to have been inflicted was not suitable for RTA conciliation. Nor was there any compelling evidence that Mr Chiang ought to be made personally responsible for alleged damage said to have been incurred during the course of the tenancy and only raised some five months after the vacate took place, and only after the owners had moved back in.
It is trite to say that not all tenancy arrangements end on a happy note. The Tribunal is satisfied that here the agent Raine & Horne’s management of the premises was adequate during the course of the tenancies and that post-tenancy issues were, as they were discernible at the time, attended to in a timely manner shortly after vacate. If there were other issues that the agent failed to identify at the time that led to a portion of the bond being refunded then that claim was never quantified. Rather, what happened was a major claim for massive damages has erupted some five months later. In those circumstances the Tribunal finds the agent Raine & Horne has no case to answer.
Nor is it the case that Mr Chiang has any case to answer. He cannot be imputed as a tenant personally simply because of lack of registration of a corporate entity he signed a general tenancy agreement for.
Added to that apparent lack of conciliation or attempted conciliation or any evidence of reference to the RTA for conciliation places the application well out of time for the institution of a proceeding for damages to the premises during the course of the tenancy.
The application is dismissed in its entirety.
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