The Baker Property Trust v David Millar Real Estate
[2011] QCAT 602
•10 November 2011
| CITATION: | The Baker Property Trust v David Millar Real Estate [2011] QCAT 602 |
| PARTIES: | The Baker Property Trust (Applicant) |
| v | |
| David Millar Real Estate (Respondent) |
| APPLICATION NUMBER: | MCDO1354-11 |
| MATTER TYPE: | Other minor civil dispute matters |
| HEARING DATE: | 26 October 2011 |
| HEARD AT: | Brisbane |
| DECISION OF: | Kate Buxton, Adjudicator |
| DELIVERED ON: | 10 November 2011 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. The respondent pay to the applicant the sum of $1,065.41 in claim and fee by 25 November 2011. |
| CATCHWORDS: | Minor civil dispute – property management agreement – whether contract amounted to breach – damages |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | The Baker Property Trust was represented by Mr and Mrs Baker |
| RESPONDENT: | David Millar Real Estate was represented by Mrs and Mrs Millar |
REASONS FOR DECISION
The Baker Property Trust (“the Trust”), the applicant in these proceedings, owns some commercial units in Caloundra. For a period of time they were managed for the Trust by David Millar Real Estate (“David Millar”), the respondent.
As with the end of many commercial relationships the communication between the parties became fractious. It was evident from the information provided by both parties at the hearing that the Trust terminated the agency agreement because of concerns that David Millar had mismanaged the units. The agreement was terminated in about early November 2010 with an agreed final handover date of 31 January 2011.
The particular concerns at the time of termination related to the management of the keys and maintenance of proper rental records. As can be seen from the nine items listed in part C of the amended application filed by the Trust with leave of the Tribunal on 30 September 2011, these concerns expanded to other issues as the acrimony between the parties developed. It is the task of this Tribunal to determine whether those concerns sound in damages.
The letting and property management agreement dated 9 February 2009 (exhibit 1) (“the Agreement”) sets out the terms upon which David Millar was appointed to manage the units. The Trust relies upon various clauses of the standard terms and conditions incorporated into the agreement. The relevant clauses were identified in part C of the amended application and the Trust asserts that David Millar was in breach of those clauses and that losses have been sustained by the Trust as a result.
The evidence in chief of Mr Baker, a Trustee of the Trust and of Mr Millar, the Principal of the respondent agency, centred around whether the contractual arrangements had been breached and, if so, whether and to what extent this would sound in damages.
Mrs Millar, the accounts manager for David Millar, gave evidence by way of explanations for some of the rental ledger entries and statements given to the Trust and Mrs Baker, also a Trustee, provided some limited evidence as to the impact of events.
The Tribunal was assisted greatly by the preparation and careful evidence provided by the parties to which I will refer, as necessary, in dealing with each of the nine claims advanced by the Trust.
Claim One – Unit 9 rent
The Trust claims $1,199.81 in uncollected rent from Unit 9 and relies, in particular, upon clauses 1, 10.11, 10.16 and 10.18 of the standard conditions. Clause 1 contains the general appointment of agent, the others I will set out in full:
10.11 The Agent is to collect and receive all monies payable (Rent, bond and otherwise) under any Tenancy Agreement entered into pursuant to this Appointment.
10.16The Agent must immediately notify the Client in writing if the Agent becomes aware of a tenant’s breach, which is in the Agent’s opinion a fundamental breach of the Tenancy Agreement.
10.18The Agent is authorised to, and in so doing may use independent legal services, to recover monies due and unpaid by the Tenant subject to the General Tenancy Agreement.
These provisions operate together to inform David Millar’s obligations when a tenant fell behind. I do not consider that they operate to indemnify the Trust against any unpaid rent by making absolute the obligation to ensure that rent is paid. Rather, those provisions together require the Agent to use its best endeavours to perform two tasks: the collection of rent and keeping the Trust informed when the rent fell behind or could not be collected.
[10] There is insufficient evidence to satisfy the Tribunal that David Millar failed in its obligation to collect the rent. I accept Mr Millar’s evidence that all the rent which was available was collected. Mr Millar was less convincing in terms of the adequacy of the communications with the Trust.
[11] It is common ground that monthly statements were sent to the Trust. These statements (exhibit 3) contain some errors in the description of the unit 9 tenant. In some months a Mr Brendan Appleby, who occupied unit 8 from February 2010, is mistakenly identified as occupying unit 9. This error continues in subsequent statements until statement 17, where the error is correct and Mr Appleby’s details are recorded against unit 8 only.
[12] Despite Mr Baker’s assertion that this demonstrated significant mismanagement by David Millar, he conceded that the Trust was not left in any genuine state of confusion as to which unit Mr Appleby was leasing and whether or not he was paying the rent. I will therefore put those entries in the statement to one side, as the Trust ought to have when reading those statements.
[13] Concentrating upon unit 9, which was leased at $660.00 per month from 1 March 2010 (see exhibit 2) it is necessary to reconcile the tenant ledger with the statements. This exercise discloses rent received from the tenant for unit 9 as follows:
Date Rent Period 19/2/10 $660.00 1 March 2010 - 31 March 2010 18/5/10 $650.00 1 April 2010 - 30 April 2010 (but $10 in arrears) 28/6/10 $650.00 1 May 2010 - 31 May 2010 (but now $20 in arrears) 20/8/10 $650.00 1 June 2010 - 30 June 2010 (now $30 in arrears) 8/9/10 $810.19 1 July 2010 - 31 July 2010 plus $30 in arrears plus the balance of $120.19 taking the paid date to approximately 7 August 2011
[14] The lease ended on 20 August 2010 at which point the tenant was slightly in arrears (on my calculations by less than 2 weeks).
[15] The ledger for unit 9 contains the following errors:
a)Incorrect start date: the first $660.00 is applied to the month of February (wrongly) as the start date for the tenancy was 1 March 2011.
b)The following month is therefore also wrongly described but this error is manually corrected in June. At this point the ledger describes the three months of rent received as taking rent to 5/5/2010 with a credit of $650.00 (reflecting the fact that the previous payments had each been $10.00 short of the agreed monthly rent).
c)The balance of the ledger is plagued with a balance of $640.00 incorrectly carried forward from the June rent (not in fact paid until August).
d)Finally, a payment of $810.19 made on 8 September 2010 is described in the ledger as being applied to the period 2 July 2010 to 7 September 2010, a period in excess of 2 months, although the amount equates to less than 1.5 months of rent.
[16] Mr Baker appears to have become frustrated to the point of fury when he was not provided with a proper explanation for these figures. It is natural to assume that it was presumably also frustrating to the trustees that payments were being made on a sporadic basis. However the relevant question is whether the method of recording rent or the lack of communication actually manifested a loss to the Trust? The lease ran from 1 March 2010 to 20 August 2010, a period of 5 months and 20 days. At the monthly rent of $660.00, 5 and 2/3 months should amount to $3,735.60 by my calculations. The receipts over the period were for $3,422.19. The shortfall, on that basis, is therefore $313.41.
[17] Interestingly, the ledger reflects a particular final payment of $810.19 as having been recorded in the ledger as taking the rent period to beyond the end of the lease. One can only assume that this final payment was calculated within the office of David Millar. It appears to be short of the required rent but only to the extent of the $313.41 as mentioned.
[18] Mr Baker’s evidence was to the effect that the tenant of unit 9 vacated on 1 October 2010 or, at least, that the unit was vacant at that time.
[19] In response, Mr Millar fell somewhat on his sword, telling of the difficulties with the tenant’s business and how he eventually skipped off without finalising his debts. Despite efforts, he said, the tenant could not be located to finalise matters. However, neither party gave definitive evidence as to when and to what extent the tenant’s contractual obligations to pay rent continued after 20 August 2010. On the available evidence the most sensible conclusion is that David Millar’s accounting did cause a shortfall in the rent, but that no more than $313.40 can be proven on the evidence. The accounting errors do constitute a breach of the term necessarily to be implied into the agreement to exercise due care and skill. As to claim one, I find the respondent liable for the sum of $313.41.
Claim two – Units 3 and 5
[20] This claim relates to accounting errors which lead to an under collection of rent. Two units were rented for one year by the same tenant. At times, rent was improperly recorded against one unit when it was in fact received for the other. These errors lead to a miscalculation when three entries were reversed against unit 3 and applied to unit 5 on 21 April 2010. However, the rent for that month was missed then, it seems, and not pursued.
[21] Twenty-three of the 24 months rent was collected, leaving a shortfall of $660.00. Liability for this amount was conceded by Mr Millar during the hearing. As to claim two, I find the respondent liable for the sum of $660.00.
Claim three – replacement keys
[22] The Trust claims $182.31 for the cost of replacing various keys to the units. The Trust relied, in particular, upon clause 7.1(4) of the standard terms incorporated into the agreement. In fact, that provision requires the Trust to provide sufficient keys for locks. There is no specific term dealing with maintenance of those keys. The Trust asserts that, ipso facto, if they could not regain entry to the units with the keys provided by David Millar on demand at the end of each tenancy this established a breach of the obligation to manage the properties with due care and skill.
[23] The response from Mr Millar was simple. He returned the keys he received. If a tenant changed locks during the course of the tenancy, then it was not his responsibility to re key the locks. This appears to be consistent with the express terms of clause 7.1(4) which charges the Trust with responsibility for keys. The Trust was not able to demonstrate any particular mismanagement with respect to keys.
[24] Mr Baker’s evidence was to the effect that, having driven to Caloundra from Brisbane on 14 October 2010, only to find that unit 9 could not be accessed with the allocated key, it was necessary to cut the padlock with bolt cutters (which task was attended to by David Millar). However, gaining access in this way was not good enough for Mr Baker. If Mr Baker’s response to the lack of information as to the rent for unit 9 could properly have been described as fury, then the events of 14 October 2010 appear to have elevated this reaction to one of incandescent rage.
[25] He seems to have had very high expectations indeed as to the standard of care and skill the Trust was entitled to receive for the management of the units. It is pertinent to bear in mind that the Trust was paying management fees of 5% of the rent received (no more than $33 per month for this particular unit). For that, the Trust received the monthly statements, the presence of both the then Property Manager Ms Sichter and Mr Millar himself, for the vacate inspection and received rent collection and general management services. However, the effect of the submission on behalf of the Trust is that David Millar ought indemnify the Trust for any damage or loss sustained by the Trust including for any replacement keys. In circumstances where any responsibility for the lost keys cannot conclusively be laid at the feet of the managing agent by any cogent evidence this Tribunal can not be satisfied that there has been any breach of the contract sounding in damages in relation to this element of the claim.
Claim four – Toilet and Energex key
[26] For the reasons expressed above and in relation to claim three, I am satisfied that the keys returned to the Trust were the same as they keys delivered by them. Oddly, in respect of the electricity room key, Mr Baker conceded that he had arranged for this room to be re keyed during the course of the tenancy but seemed to still assert an entitlement to the return of the original keys. There is no breach of contract established on the evidence and, in any event, no discernable damage to the Trust. The Tribunal cannot therefore be satisfied as to any entitlement in respect of this claim.
Claim five – Trips to Caloundra
[27] The Trust claims that its Trustees had to attend unnecessarily to “supervise” the properties because they were not being properly managed. The dates for these trips were 9 November 2010, 18 November 2010 and 13 December 2010. Each of these trips were made after the Trust terminated the agreement and notwithstanding the agreed termination date of 31 January 2011, appeared to have been made with the objective of securing early possession of the units or arranging future tenancies. These steps appear to have been taken with the (tacit) co-operation of David Millar. It is impossible to identify any basis at law for which David Millar will be liable to compensate the Trust for expenses related to these trips and this claim must therefore fail.
Claim six – cleaning and replacing locks
[28] As I have determined that the replacement locks was not the responsibility of the respondent, it follows that any claim for time taken in installing those locks must also fail.
[29] The claim for cleaning is not supported by the evidence. I accept that the unit was left in an unclean condition. However, I also accept that David Millar made all the reasonable steps to pursue the vanishing tenant of unit 9 and is not liable to indemnify the Trust for the cleaning costs if the tenant cannot be successfully pursued. This element of the claim must also fail.
Claim seven – loss of rental – Unit 4
[30] This claim made by the Trust was exposed during the hearing, through the evidence of Mr Millar and the re examination of Mr Baker, as a somewhat disingenuous attempt to recast history in an unfair light.
[31] The inquiry from Mr Nigel Dowling in respect of unit 4 could not have been converted into business by the respondent on behalf of the Trust because the keys to the property had already been provided to the Trust who had in turn placed it in the hands of their new agent. It would be surprising indeed if David Millar’s staff had acted, during the course of the management agreement, in a way which deprived them of receiving the only possible benefit to them: commission on rent. I therefore accept as the only cogent explanation that Mr Dowling’s inquiry came after the agreement was terminated on 4 November 2011 and the keys to the unit returned to the Trust. This claim cannot be substantiated.
Claim eight – Legal fees
[32] This claim effectively amounts to a claim for costs not ordinarily awarded in this Tribunal unless the interests of justice require. I accept that Mr Baker, a trustee of the Trust, was advised by his doctor to step back from his involvement in this claim which seemed to have been causing him unnecessary stress. However, it is the Trust, not the trustees, who are the applicant in these proceedings. It was open to Mr Baker to arrange an alternative trustee who was not so personally affected by the events. The claim for costs is therefore disallowed.
Claim nine – Filing fee
[33] The Trust has enjoyed some success in this claim and is therefore entitled to recover the filing fee of $92.00 from David Millar.
Order
The respondent pay to the applicant the sum of $1,065.41 in claim and fee by 25 November 2011.
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