Stockdale & Leggo v Gordon
[2017] QCATA 112
•17 October 2017
CITATION: | Stockdale & Leggo v Gordon [2017] QCATA 112 |
PARTIES: | Stockdale & Leggo Caloundra |
| v | |
| Craig Gordon (Respondent) | |
APPLICATION NUMBER: | APL112-17 |
MATTER TYPE: | Appeals |
HEARING DATE: | On the papers |
HEARD AT: | Brisbane |
DECISION OF: | Member Gordon |
DELIVERED ON: | 17 October 2017 |
DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. Leave to appeal is granted. 2. The matter is remitted to the tribunal for reconsideration of the claims about the floor and blinds. 3. The claims about the floor and blinds shall be treated by the tribunal as if they were brought by counter application by Stockdale & Leggo against Craig Gordon in Maroochydore MCDT 61/17. 4. In the remitted hearing, the tribunal may take into account the documentary material lodged in the original claim and in the appeal, and the evidence given by the parties at the hearing on 24 March 2017. 5. To enable that to happen, a copy of the transcript and the submissions on the appeal file shall be provided to the tribunal for its remitted hearing. |
CATCHWORDS: | APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – ERROR OF LAW – where bond claim heard by the tribunal – where tribunal refused to take into account quotes to repair where the repair had not been carried out and the premises had been relet – where tribunal told the applicant that they could apply to reopen when repairs were eventually done – whether errors of law LANDLORD AND TENANT – COVENANTS TO REPAIR – MEASURE OF DAMAGES FOR BREACH – where floor and blinds damaged by tenant – where tenant had done some repairs which lessor considered unsatisfactory – where no further repairs had been carried out by lessor – correct approach to the assessment of compensation Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 146 Davidson v J S Gilbert Fabrications Pty Ltd [1986] 1 Qd R 1 Robinson v Harman (1848) 1 Exch 850 |
APPEARANCES: |
This appeal was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
REASONS FOR DECISION
When Craig Gordon’s residential tenancy ended, he was in dispute with the lessor’s real estate agents Stockdale & Leggo Caloundra, about what should happen to the rental bond held by the Residential Tenancies Authority. He applied to the tribunal to have this dispute resolved.
At the hearing on 24 March 2017 before Justices of the Peace, Stockdale & Leggo were successful in their claims from the bond in respect of rent and electricity, but failed in their claims in respect of damage to the floor and to the blinds.
In this appeal they say that the tribunal erred in the way it approached the claims about the floor and the blinds. In particular they say that the tribunal was wrong to say that compensation could not be awarded only based on quotes, no repair work having been done.
What happened at the hearing can be seen from the transcript obtained by the Appeal Tribunal.
The Floor
At the hearing the tenant admitted that during the tenancy the wooden floor to the living area was damaged. At the end of the tenancy, the tenant engaged a flooring contractor to repair the floor by sanding and applying a top coat. At the hearing the lessor’s property manager said that it appeared that the top coat was different from that on the remainder of the floor. That, plus the sanding which had been done had resulted in differences in texture, height and colour in the area of the damage.[1] So there still remained residual damage to the floor. The tribunal seemed to agree that this was the case, at least as seen on the property manager’s photographs.[2]
[1]Transcript 1-25 line 38.
[2]Transcript 1-27 line 29, 1-28 line 27.
The property manager had obtained a quote for $800 including GST to deal with this problem by further sanding, buffing and filling where necessary followed by the application of top coats. She said that this work had not yet been done because it needed to be done when the premises were empty; Mr Gordon confirmed that the premises had been relet quickly after he left.[3]
[3]Transcript 1-30 line 24, 1-33 line 28.
The evidence about the floor was truncated because the tribunal refused to go any further with the claim upon hearing that the repair work had not been done and that there was only a quote and new tenants had occupied the premises.[4] The tribunal dismissed it for the same reason.[5]
[4]Transcript 1-29.
[5]Transcript 1-38 line 37.
The Blinds
The tenant admitted that during the tenancy the blinds were damaged. At the end of the tenancy, the tenant engaged a contractor to repair the blinds but in this process the pelmets fell down and were not replaced. There were 5 pelmets which needed replacing. Also there was a question whether the blind in the media room had been repaired properly.
The property manager had obtained a quote to replace the pelmets and repair the blind in the media room for $185.
Again however, the tribunal refused to hear any more about this claim and dismissed it because no repair work had been done.[6]
[6]Transcript 1-35 line 16, 1-38 line 38.
The correct approach to assessing compensation
Since the claim is a contractual one, the starting point for assessing compensation is usually that the innocent party should (as far as financially possible) be put in the position in which that party would have been if the contract had been properly performed.[7]
[7]Robinson v Harman (1848) 1 Exch 850; Johnson v Perez (1988) 166 CLR 351 (High Court).
Therefore it is usually necessary to identify the contractual term that was breached. In a lessor’s claim at the end of a tenancy this is usually the tenant’s obligation to leave the premises and inclusions as far as possible in the same condition they were in at the start of the tenancy, fair wear and tear excepted.[8] There are also obligations to keep the premises clean, having regard to their condition at the start of the tenancy[9] and not maliciously damage, or allow someone else maliciously to damage the premises.[10]
[8]Clause 37 of the standard term tenancy agreement corresponding to section 188(4) of the Residential Tenancies and Rooming Accommodation Act 2008 (Qld).
[9]Clause 26(1) corresponding to section 188(2).
[10]Clause 26(2) corresponding to section 188(3).
The innocent party’s right to claim compensation arises when the breach of contract has occurred. So in the case of damage to property in breach of contract, it is not a condition precedent to the claim that the innocent party has incurred expense by doing a repair.[11] The tribunal erred in taking that approach.
[11]Dimond v Lovell [2002] 1 AC 384 (English House of Lords).
In the case of damage to property in breach of contract, the aim will be to compensate the innocent party for the diminution of the value of the property. The starting point for this assessment is usually the cost of repair.[12] Consequential losses can also be recovered.
[12]Davidson v J S Gilbert Fabrications Pty Ltd [1986] 1 Qd R 1.
In many instances which arise in bond claims, the tribunal will need to make adjustments to the cost of repair, whether actual or prospective, to produce a fair award.
Damage to wooden floors are particularly difficult to assess. A common scenario is that the tenant has damaged part of the floor as in this case. Mindful that a localised repair may not produce a perfect result, the lessor might then obtain a quote for the refinishing of the whole floor. The tenant may argue that a localised repair is sufficient.
In such a case to produce a fair result, the tribunal will need to balance a number of factors. If the lessor has done a localised repair but this has left some residual damage, then the lessor would recover the cost of that repair and an award to represent the diminution in the value of the property because of that residual damage.
If the lessor has refinished the whole floor, then the tribunal will need to consider whether the floor is now in a better condition than it would have been if the tenancy agreement had been performed, that is to say if the premises had been returned in the condition they were at the commencement of the tenancy fair wear and tear excepted. If so, then there is an element of betterment. If it is fair to reduce the lessor’s compensation to allow for that betterment then it would need to be assessed. It is not always fair to reduce the lessor’s award for betterment, for example if a lessor has no alternative but to carry out a particular repair as a result of the tenant’s breach, or where there will be no current benefit.[13]
[13]For example, if a tenant damages a rainwater downpipe which has been in situ for many years, the lessor has no choice but to replace it but the net result is better than before. The lessor might get a current benefit from the repair because the premises are now more attractive to prospective tenants or a purchaser if they are to be sold: as in Gagner Pty t/as Indochine Café v Canturi Corporation Pty Ltd (2009) 262 ALR 691 (NSWCA).
If no repair has yet been done, then the tribunal will need to consider what repair it would be reasonable for the lessor to do. If only a localised repair is reasonable then the tribunal would consider the likely cost of this and the likelihood of any residual damage to the floor. If refinishing the whole floor is reasonable then the tribunal would consider the likely cost of this and whether there would be any betterment and if so whether it would be fair to reduce the award because of this. Where matters are finely balanced, then there would be nothing wrong with taking a middle ground to produce a result fair to both parties.
Consequential losses in such a case may arise if for example the lessor convinces the tribunal that reasonable repairs are definitely to be done but there would be a loss of rental income while they are being done.
In some cases questions of causation, mitigation and foreseeability of loss (remoteness of damage) also arise.
Offer of reopening
When dealing with the property manager’s expressed concern about losing the floor and blind claims because the work had not yet been done, the tribunal said that the lessor would be able to come back to the tribunal by way of “reopening” if they had the work done.[14] At the hearing this seemed to appease the property manager. It did not however, appear in the tribunal’s order.
[14]Transcript 1-30 line 22, 1-36 line 8 and 26, 1-39 line 1.
The advice was incorrect. To reopen the proceedings where both parties had attended the hearing would require there to be a substantial injustice if the proceeding were not reopened because significant new evidence had arisen and that evidence was not reasonably available when the proceeding was first heard and decided.[15] This would not apply because the extent of the damage was known at the hearing, and the property manager would have been able to give evidence about the way in which the damage was to be dealt with. There would be no new evidence which was not reasonably available when the proceeding was first heard.
[15]Paragraph (b) of the definition of “reopening ground” in Schedule 3 to the Queensland Civil and Administrative Tribunal Act 2009 (Qld).
The tribunal would also lean against reopening in such a case because the remedy was quantifiable at the hearing and it would not be consistent with the tribunal’s aims to have more than one hearing to resolve the dispute.[16]
[16]An aim of the QCAT Act is to have the tribunal deal with matters in a way that is accessible, fair, just, economical, informal and quick: section 3(b) QCAT Act.
A further difficulty with this approach is that there is a 28-day time limit to apply to reopen, and it also requires a fee to be paid.[17]
[17]The 28-day time limit is in rule 92 of the QCAT Rules. Although there is power to extend this time, in minor civil dispute matters this power is restrained by section 61(3) of the QCAT Act: no power to extend where an extension would cause prejudice which cannot be remedied by an appropriate order for costs or damages.
It is possible that the suggestion of reopening was understood by the property manager that the lessor make a fresh application to the tribunal after the work was done. This is the way she put it to the tribunal but was not corrected.[18] However, this would not be permitted by the tribunal because the right to sue for the damage to the floor and blinds would have disappeared upon it being dealt with by the tribunal on 24 March 2017.[19]
[18]Transcript 1-33 line 42.
[19]Port of Melbourne Authority v Anshun Pty Ltd (Anshun Case) (1981) 147 CLR 589.
Disposal of the appeal
This is an appeal for error of law. Since this is an appeal in a minor civil dispute it requires leave of the Appeal Tribunal which I give. Although when there is an error of law it is possible for the Appeal Tribunal to substitute its own decision, the difficulty is that the evidence before the tribunal below was truncated because of the approach taken.
Evidence should have been heard sufficient to enable the tribunal to assess the proper level of compensation for the damage to the floor and to the blinds on the principles set out above. In the circumstances the matter of the floor and blinds should be remitted back to the tribunal for reconsideration.
I am not going to specify the constitution of the tribunal to hear the remitted hearing. It would be most efficient if the original tribunal could hear it, but this is not essential.
The Residential Tenancies Authority will already have complied with the tribunal’s order of 24 March 2017 and distributed the bond in accordance with that order. In the circumstances, Stockdale & Leggo’s claim with respect to the damage to the floor and blind should be regarded as having been brought by counter application against Craig Gordon, and heard in the minor civil dispute list.
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