Wealthwood Realty Pty Ltd v Pearson
[2021] QCATA 13
•21 January 2021
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION:
Wealthwood Realty Pty Ltd v Pearson [2021] QCATA 13
PARTIES: WEALTHWOOD REALTY PTY LTD (applicant/appellant)
v
LISA PEARSON (respondent)
APPLICATION NO/S:
APL216-20
ORIGINATING APPLICATION NO/S:
MCDT1501-20 Brisbane
MATTER TYPE:
Appeals
DELIVERED ON:
21 January 2021
HEARING DATE:
On the papers
HEARD AT:
Brisbane
DECISION OF:
Member Howe
ORDERS:
Application for leave to appeal refused.
CATCHWORDS: APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – where a tenant claimed excessive hardship caused by the Covid-19 emergency – where the parties could not agree on a tenancy variation agreement – where the lessor’s agent applied to the Tribunal for an order that the respondent pay all outstanding rent under the tenancy agreement – where an Adjudicator ordered relief against payment of $1,421.07 rent to the date of hearing – where the agent sought leave to appeal - where the agent claims there was no power in the Tribunal to make an order granting relief – where the agent claimed the Adjudicator erred in excluding consideration of the respondent’s assets in determining whether she suffered excessive hardship preventing her paying rent
COVID-19 Emergency Response Act 2020 (Qld),
s 24(7)(a)Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 420
Residential Tenancies and Rooming Accommodation (COVID–19 Emergency Response) Regulation 2020 (Qld), s 6, s 11, s 12
REPRESENTATION:
Applicant:
Self-represented by Shuchong Yan
Respondent:
Self-represented
APPEARANCES:
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)
REASONS FOR DECISION
The applicant, Ms Pearson, was a tenant of residential premises in Brisbane from June 2019. Her weekly rent was $595.
The respondent (‘Wealthwood’) was real estate agent for the lessor prior to Covid-19 striking in early 2020.
Wealthwood gave Ms Pearson a show cause notice for rent arrears on 11 May 2020 when her rent was overdue by eight days.
Ms Pearson claimed she was suffering from excessive hardship caused by the Covid-19 emergency because of loss of employment.
Wealthwood claimed in turn that Ms Pearson had sufficient assets to enable her to pay rent in full. After failing to agree on a tenancy variation agreement, Wealthwood applied to the Tribunal for an order that Ms Pearson pay rent in full to date of the application in the sum of $2,287.14.
The matter was heard before an Adjudicator on 10 July 2020 who made the following order:
The respondent is granted relief from the payment of rent in the sum of $1,421.08 up until 10 July 2020.
Wealthwood, on behalf of the lessor, seeks leave to appeal that decision.
Given this is an appeal from a decision made in the Tribunal’s minor civil dispute jurisdiction, leave to appeal must first be obtained before any appeal proceeds.[1]
[1]Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 142(3)(a)(i).
Leave to appeal will usually only be granted where an appeal is necessary to correct a substantial injustice to the appellant and where there is a reasonable argument that there is an error to be corrected.[2]
[2]Pickering v McArthur [2005] QCA 294.
In the application for leave to appeal Wealthwood advised three grounds of appeal as set out below verbatim:
(a)
The Tribunal does not have a power to make an order to grant relief under
s 12(4) of Residential Tenancies and Rooming Accommodation (Covid – 19 Emergency Response) Regulation 2020 (the ‘Covid – 19 Reg’) and s 420 of Residential Tenancies and Rooming Accommodation Act 2008 (the ‘Act’);
(b)The adjudicator had an error in law to find that s 6 of the Covid – 19 Reg gave the tenant an option “to apply for (rent) diminution”. Section 11(5) gives the lessor a right to request tenants to enter into a tenancy variation agreement, but not an obligation to do so;
(c)When considering whether to order the respondent to make payment of monies under s 420(1)(b) of the Act, the Adjudicator erred in using only the “income test” under s 6 of the Covid – 19 Reg instead of assessment based on the whole of evidence that the tenant has sufficient savings (over $420k a year ago) to pay the unpaid rent.
The legislation
Under s 6 of the Residential Tenancies and Rooming Accommodation (COVID–19 Emergency Response) Regulation 2020 (Qld) (‘Regulation’) a person (a tenant) suffers excessive hardship because of the Covid-19 emergency if, during the Covid-19 emergency period, any of a number of listed circumstances apply to the person.
One such is where the person’s place of employment is closed or the trade or business conducted by the person’s employer is restricted because of a public health direction[3] and the person suffers a loss of income of 25% or more or the rent payable by the person under a residential tenancy agreement or rooming accommodation agreement is 30% or more of the person’s income.
[3]Section 6(2)(a)(iii).
In that circumstance the lessor must give the tenant a show cause notice for the unpaid rent. Within 14 days of receiving that notice the tenant must either pay the unpaid rent or tell the lessor that the rent is unpaid because the tenant is suffering excessive hardship because of the Covid-19 emergency,[4] upon which the lessor may request that the tenant enter into a tenancy variation agreement.[5]
[4]Section 11(3).
[5]Section 11(5).
If the parties cannot agree on a tenancy variation agreement, then s 12(2) provides that the parties may seek dispute resolution through the Residential Tenancies Authority as provided for under the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (‘RTRAA’).
Section 12 goes on to provide:
(3) If the tenancy dispute is not resolved through conciliation under chapter 6, part 1 of the Act, either party may apply to the Tribunal for an order about the unpaid rent.
(4) On an application under subsection (3), the Tribunal may make an order it considers appropriate about the unpaid rent.
Note—
See also the powers of the Tribunal under section 420 of the Act.
Grounds of appeal
Grounds 1 and 2 – no power in the Tribunal to grant the relief
Grounds 1 and 2 are conveniently able to be considered together.
Ms Pearson lost her employment as a personal trainer because gyms closed during the Covid-19 emergency. Her evidence was that even when they reopened (with restrictions) her clients did not return to her.
Wealthwood’s arguments about the Tribunal’s lack of power to make orders is not entirely clear but the first contention seems to be that the Adjudicator erred in deciding that s 6 gave Ms Pearson as a tenant an “option” to apply for termination of the tenancy agreement or apply for diminution of rent.
But Ms Pearson did neither here. It was Wealthwood who applied to the Tribunal about unpaid rent.
By s 12(3) of the Regulation, if a dispute about rent cannot be resolved through conciliation then either party may apply to the Tribunal “about the unpaid rent”. The Tribunal was clearly empowered to make “an order it considers appropriate about the unpaid rent.”
The assertion that the Adjudicator relied on s 6 of the Regulation to give Ms Pearson an option to apply for termination of the tenancy agreement or an option to apply for diminution of rent is simply wrong. It is not borne out on a reading of the transcript of evidence at the hearing. The learned Adjudicator said no such thing.
The Adjudicator made no reference to s 6 being a source of entitlement for the tenant to apply to the Tribunal. That entitlement did exist of course, but it was to be found in s 12(3). The Adjudicator made reference to s 6 only to accept that excessive hardship had been established in the context of the Covid-19 emergency provisions of the Regulation. The Adjudicator said:
So in terms of the excessive hardship being established per se, yes, it is established. That is all regulation 6 is about.[6]
[6]Transcript 1-15 Line 13.
As stated, by s 12 the Adjudicator had authority to make an order about unpaid rent. He did just that. He was clear in his reasons given at hearing that he could not make an order about rent generally under the tenancy agreement, but only about rent arrears in dispute as at date of hearing:
Adjudicator: But as I said, I can’t make orders in respect of what might be colloquially termed new rent. I can only make orders about past rent or unpaid rent.[7]
[7]Transcript 1-14 Line 41.
There was no error made by the learned Adjudicator here.
Wealthwood then submits that the order made by the Adjudicator was beyond power because the orders able to be made are limited to those found in s 420 of the RTRAA. Nothing, says Wealthwood, in s 420 allows the Tribunal to order relief of a party’s breach of its obligations under the tenancy agreement.
Wealthwood wrongly conflates two separate pieces of legislation, the Regulation and the RTRAA, and thereby fails to recognise that an order of the Tribunal allowing a lesser amount of rent to be paid than otherwise provided under the tenancy agreement is not a breach of that tenancy agreement because it may be authorised by s 12 of the Regulation.
The Regulation applies to all residential tenancy agreements entered into before or after 29 March 2020 and to all lessors, tenants and agents for such tenancy agreements.[8] It applied to the subject tenancy agreement. To the extent of any inconsistency between the Regulation and the RTRAA, the Regulation takes precedence.[9]
[8]Regulation, s 4.
[9]Regulation, s 7 and COVID-19 Emergency Response Act 2020 (Qld), s 24(7)(a).
The power granted under s 12(4) of the Regulation is broad and appropriate orders are not restricted to only orders available under s 420 RTRAA. The note that follows
s 12(4) is in the nature of an adjunct reminder of additional potential powers available in making the appropriate order about unpaid rent.
Whilst the order made by the Adjudicator here was framed in terms of relief from payment of rent, the Adjudicator made clear in his reasons for decision that he was only making an order in terms of the matter referred to the Tribunal, namely the disputed unpaid rent under the tenancy agreement. He said:
So the rental [indistinct] is 2842.15. I think at least, at the very least, the rent ought to be – for the period up until today from that time, reduced to 50 per cent, and 50 per cent of that figure, the 2842.15, is the 1421.07. So the way I’m going to tend to couch the order is to say that the respondent is relieved from the payment of rent to 40 or – to a sum of or in respect of a sum of $1421 as at the 10th of July 2020.[10]
[10]T1-15 L37.
Section 12 does not contain a clear statement that an appropriate order that may be made by the Tribunal is to order that the tenant pay less rent.
However s 12 applies when the lessor has requested under s 11(5) that a tenant enter into a tenancy variation agreement but the lessor and tenant cannot agree about that. Then the unpaid rent which triggered a show cause notice followed by negotiation then conciliation with a view to agreement on a tenancy variation falls for consideration by the Tribunal.
Section 13 concerns tenancy variation agreements. That provision makes clear the intention of a tenancy variation agreement is to formalise a rent reduction for a stated period. Section 14 deals with rent decreases consequent on a tenancy variation agreement. Rent reduction is clearly the principal factor for consideration by the Tribunal under s 12 where the parties cannot agree on rent reduction themselves.
Section 12 would be meaningless if rent reduction was not an appropriate order available to the Tribunal after the negotiation under s 11 and then conciliation under s 12(2) fails. The scheme of the Regulation is clear enough.
Wealthwood has no reasonable prospect of success with either of these grounds of appeal.
Ground 3 – the Adjudicator erred in only considering the effect of the Covid-19 emergency on the tenant’s income in circumstances where the tenant had sufficient assets to pay rent
The submissions concerning this ground of appeal are a little hard to follow but seem to amount to this. Wealthwood says the use of the word “because” found twice in
s 11(5)(b)[11] of the Regulation should be understood to impose an obligation on a tenant to prove, on the balance of probabilities, not only that the tenant falls within the definition of excessive hardship stated in s 6 of the Regulation, but also that the tenant cannot afford to pay rent through savings independently of income.
[11]One presumes - sub-subsection 11(5)(b) is not specifically identified but there the word “because” occurs twice.
As relevant s 11 provides:
(5) If—
(a) the tenant does not pay the unpaid rent within 14 days after being given the show cause notice; and
(b) the tenant informs the lessor under subsection (3)(b) that the rent is unpaid because the tenant is or has been suffering excessive hardship because of the COVID-19 emergency;
the lessor may request that the tenant enter into a tenancy variation agreement with the lessor.
Ms Pearson had known savings, submitted Wealthwood at hearing, of approximately $420,000 at the time of first entering into the tenancy. Given Ms Pearson provided no evidence about her savings, either before or at the hearing, she cannot be said to be suffering excessive hardship because of the Covid-19 emergency. Section 11 should be understood as introducing a “but for” test. That is, she must prove that “but for” suffering the excessive hardship identified in s 6, she would have been able to pay the rent.
This is a convoluted way of saying that a tenant must pay rent if she has sufficient savings regardless of the effect of the Covid-19 emergency on income.
Wealthwood maintains that there is an assets test as well as income test for a tenant to qualify for relief from payment of rent under the Regulation.
The initial problem that arises for Wealthwood about this argument is that s 11(5)(b), containing the double reference to “because”, even if the submission made by Wealthwood be accepted, is limited to the negotiation stage required by the Regulation. Section 11(5)(b) has no cross-over bearing on the involvement of the Tribunal in resolving disputes about unpaid rent provided for by s 12. That only arises after the conciliation stage ends.
But in any case, Wealthwood’s submission that there is an implied assets test on a reading of s 11 which also applies to s 12 lacks merit generally.
Section 6 identifies circumstances when a tenant suffers excessive hardship because of the Covid-19 emergency. There is no reference to assets, only income as the qualifying monetary consideration. One notes the word “income” is defined in the Dictionary to the Regulation but there is no reference in the Regulation to assets. The income definition does not include any reference to savings.
Section 11 requires the parties to undertake conciliation to attempt to resolve a dispute arising out of circumstances of excessive hardship identified in s 6. If that does not work then the parties try conciliation and if that does not achieve an agreed result then either party can apply to the Tribunal to decide the initial dispute over unpaid rent in the circumstances of excessive hardship identified in s 6.
There is no assets test in the test for excessive hardship under the Covid-19 emergency provided for in s 6 of the Regulation.
The learned Adjudicator stated the test was about income, not assets. He was correct. He made no error.[12]
[12]T1-10 L37.
Wealthwood has no prospects of success on this ground of appeal. Leave to appeal must be refused.
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