Wong v Pie & Wood
[2014] QCATA 50
•24 March 2014
| CITATION: | Wong v Pie & Wood [2014] QCATA 50 |
| PARTIES: | Alice Wong Leon Wong (Appellants) |
| v | |
| Tayla Pie Alexandra Wood (Respondents) |
| APPLICATION NUMBER: | APL556-13 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Dr J R Forbes, Member |
| DELIVERED ON: | 24 March 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Leave to appeal is granted. 2. The appeal is allowed. 3. The orders made by the Tribunal on 3 December 2013 are varied to read as follows: It is ordered that the Respondents pay to the Applicants the sum of $6,486.29 made up as follows: Rental arrears of $5,350.00 Less bond paid to Lessors $2,140.00. |
| CATCHWORDS: | APPEAL – LEAVE TO APPEAL – MINOR CIVIL DISPUTE – RESIDENTIAL TENANCY DISPUTE – where lease terminated for non-payment of rent – where re-letting at lower rent – whether lessors entitled to damages for reduction in rent from date of new lease to date when respondents’ lease was due to expire – whether landlords’ entitled to damages for re-letting expenses – whether tribunal erred in dismissing either or both of those claims – whether those claims are a compensable consequence of lessees’ breach – whether leave to appeal should be granted – whether appeal should be allowed Queensland Civil and Administrative Tribunal Act 2009 (Qld) ss 32, 45 Abdullahi v Taxi Council of Queensland Incorporated & Anor [2011] QCAT 374 Watts v Rake (1960) 108 CLR 158 |
APPEARANCES and REPRESENTATION (if any):
This matter 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
The appellants (“the landlords”) made a fixed term agreement[1] with the respondents (“the tenants”) to lease premises in Wickham Street, Fortitude Valley, from 29 March 2013 to 28 March 2014. Somewhat surprisingly, the agreement is not in evidence, but apparently it was in the form of a general tenancy agreement (Form 18a) under the Residential Tenancies and Rooming Accommodation Act 2008 (“the RTRAA”), with no special terms.
[1]Within the meaning of the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) s 70.
The rent payable by the tenants fell into arrears. A termination order, effective on 20 September 2013 was executed on 3 October 2013.
On 5 November 2013 the landlords commenced proceedings against the tenants claiming $4,592 for arrears and loss of rent, $330 for cleaning and repairs, $50 for treatment of a carpet, $347.86 for replacement of a lock and key, $495 for an agent’s re-letting fee, $98.88 and $123.60 for “miscellaneous” items, and $101.40 filing fee – a total of $6,037.34.
The hearing took place on 2 December 2013. The applicant Alice Wong appeared in person, the respondent Wood appeared by telephone, and the respondent Pie failed to appear.
Ms Wood admitted liability for several of the items claimed. There remained in dispute the quantum of arrears, the loss resulting from a re-letting at a lower rent, and re-letting expenses.
The tribunal awarded $5,350 for unpaid rent from 15 August 2013 to 25 October 2013 (when a new tenant was secured). The total award (filing fee included) was $6,249.14, less bond of $2,140, leaving a balance of $4,109.14. The claims for loss of rent ($1,882.15) and re-letting expenses ($495) were disallowed.
The landlords now seek leave to appeal against those disallowances.
Loss of rent
The basis of this claim is that, from 25 October 2013 to 28 March 2014 (when the tenants’ lease was due to expire) the premises were leased to a new occupant for $450 per week - $85 per week less than the rent the tenants were bound to pay.
Recognising their common law and statutory[2] duty to mitigate, the landlords instructed their agent[3] to obtain a new tenant. That was achieved within 3 weeks of the premature end of the respondents’ lease.
[2]RTRAA s 362.
[3]Style Estate Agents, Wilston.
On the advice of their estate agent[4], and in the light of current market conditions, the landlords decided that their loss could best be minimised by charging the new tenant a rent of $450 per week.
[4]Market appraisal by Style Estate Agents, 11 October 2013.
The receipt of that advice, the landlords’ acceptance of it, and the fact of reduced rent are not in dispute. However, this head of claim was rejected for these reasons only:
Given that the claim is for a substantial amount, and given that Ms Wood has not been given an opportunity to consider the market appraisal and provide her own evidence in response, such as securing her own market appraisal, I do not consider that it would be in the interests of justice or fairness to consider that evidence, because Ms Wood has been denied the opportunity to consider it or prepare her own response. In the circumstances, I’m not prepared to accept that evidence, and I do not consider it reasonable to award the claim for the difference in the rent reduction.[5]
[5]Transcript of hearing 3 December 2013 (“Transcript”) page 20, lines 43-47, page 21, lines 1-3.
With respect, this appears to confuse prior notice of a claim with pre-trial access to evidence in support of the claim. It is trite law that natural justice requires the former,[6] but (subject to an order for particulars or discovery) not the latter. It does not appear that the Adjudicator was referring to Practice Direction 4 of 2009,[7] which is not well adapted to Minor Civil Disputes.
[6]Byrne v Kinematograph Renters’ Society Ltd [1958] 1 WLR 762 at 784; Green v Nanango Bowls Club Inc [2002] QSC 201.
[7]Expert evidence – treatment of reports.
However, the lessors’ notice of dispute informed the tenants that the landlords claimed ‘compensation for lost [sic] of rent due to breach of lease’. Particularity was lent to that claim as follows: ‘To mitigate loss, property agent managed to find new tenants at reduced rent from 25/10/2013. Compensation is sought for ... loss from reduced rent’.[8]
[8]Notice of dispute part C.
Further particulars appear in an annexure to the notice of dispute: ‘Tenant ledger ... 25/10/13 new lease @ $450 pw signed ... reduced rent 25/10/13 to 28/3/14, 155 days x 12.1429 per day $1,882.15’.[9]
[9]Notice of dispute attachment 1.
In the absence of any formal or informal application by the tenants for further particulars, or for discovery, I consider that the notice and particulars supplied are sufficient for purposes of a minor civil claim. It was open to the tenants to ask, pre-trial, why a rent of $450 was regarded as sufficient mitigation, or to offer their own assessment of a proper figure, before or at the trial. That was not done. But litigants in this tribunal are not entitled to remain passive, waiting for an opponent or the tribunal to remedy their inactivity. They are expected, in their own interests ‘to take active steps to engage in a proceeding’.[10]
[10]QCAT Act s 45; Stainton v Footlong Subs Employment Services Pty Ltd [2011] QCAT 186 at [9]; Oakley v Baille [2013] QCATA 282 at [4]; Abdullahi v Taxi Council of Queensland Incorporated & Anor [2011] QCAT 374 at [26].
When a plaintiff has tried to mitigate his loss, and a defendant says that his efforts were insufficient, the onus of proving insufficiency is on the defendant.[11] But contrary to that common law rule, and to section 45 of the QCAT Act, these tenants displayed masterly inactivity. The reason may be that Ms Wood’s own valuation of the premises was unflattering:
I’d ... spoken to a few people, but the rent was just too much for them, especially with the decor of the apartment ... they just said it wasn’t worth that much ... Even half of it ... The only reason I agreed to pay 535 ... is because I started the lease off with three girls ... I would never have gone into that lease with two people, because it’s just ridiculous for what the place is.[12]
[11]Watts v Rake (1960) 108 CLR 158 at 159 per Dixon CJ; Lorca v Holts’ Corrosion Control Pty Ltd [1981] Qd R 261.
[12]Transcript page 18 lines 1 - 3, 10 - 14.
In my respectful view, it was an error of law to refuse the claim for loss of rent on the ground that Ms Wood was not given a copy of the market appraisal with an express or implied invitation to respond to it. No other reason for the refusal was given.
The re-letting fee
It is not disputed that the landlords paid an agent’s fee of $495 for advertising and re-letting the premises in late October 2013. The lessors simply say that they are not liable for that expense. The tribunal’s first reason for refusing that claim is that it was not the subject of a special term of the lease,[13] and ‘it is well established in the tribunal that a re-let fee can only be awarded if the tenant has agreed to it’.[14] I am unable to find any authoritative confirmation of such a practice. There are cases in which re-let fees have been allowed, in the apparent absence of a special term.[15]
[13]Transcript page 9 lines 8 - 44; page 19 line 7
[14]Transcript page 21 lines 13 - 14.
[15]Parker v Parker [2010] QCAT 235; Chang v Moyer [2013] QCAT 70; Toowong Units Pty Ltd v Beal [2011] QCAT 366. See also Professional Atherton Real Estate v Newton and Bond [2010] QCATA 117. Although the primary decision in the latter case was varied, no principled objection to allowance of a re-letting fee was expressed.
However, whatever the practice has been, the law of damages for breach of contract must be decisive.
The second reason for disallowing the re-letting fee is that ‘it doesn’t flow from the loss... Some agents don’t charge it, so it’s not strictly compensation. The loss of rent is, because that flows. That’s a natural cause... but a re-letting fee is not a natural flow-on effect from an early termination of a lease’.[16]
[16]Transcript page 19 lines 9 - 13; page 21 lines 11 - 16.
In fact there was no evidence about the common practice of agents in cases of this kind, unless the tribunal relied on Mrs Wong: ‘I had this kind of situation before, and I was awarded for the re-letting fee, always’.[17] However, I attach no weight to that remark; nor do I consider that ‘some agents don’t charge it’ is a matter for judicial notice. The fact is that a fee was charged, and, according to the Hadley v Baxendale[18] principle, it is more reasonable to assume that a professional agent would expect to be paid for the service than to suppose it would be provided gratis. (Woods, in her submissions on appeal, volunteered that when seeking an early release, she offered to ‘pay for advertising’.)[19]
[17]Transcript page 19 lines 15 - 16.
[18](1854) 9 Ex 341 at 354; Commonwealth v Amann Aviation Pty Ltd (1992) 174 CLR 64.
[19]Submissions 9 January 2014 page 1 #2.
In other words, the re-letting fee (quantum of which is not challenged) should be fairly and reasonably regarded as arising naturally, that is, in the usual course of business, or as something that the tenants would naturally expect to occur. In these civil proceedings we are, after all, guided not by certainties but by the balance of probabilities.
It is unnecessary to decide whether Clause 7(2) of the lease, as contended by the landlords, provides an alternative means of recovering the fee. But I note in passing that it is predicated upon termination by a tenant. This lease was terminated by judicial decree, on the landlords’ application.
Tenants’ submissions
The tenants’ response to the application for leave was filed on 9 January 2014. It attempts to re-open the termination proceedings, a question that cannot be entertained at this stage. It offers new[20] (and irrelevant) evidence about Pie’s failure to pay her share of the rent, and misconduct on the latter’s part that need not be detailed here. But it simply does not deal with the issues raised by the application for leave, namely the loss resulting from the lower rent, and the re-letting fee. Accordingly it requires no further discussion here.
[20]In the sense of evidence which (if relevant) could and should have been adduced at the trial.
Conclusions
For the reasons set out above, I consider that the rejections of the landlords’ claims for loss of rent ($1882.15) and re-letting expenses ($495) are affected by errors of law, and that an injustice would be done if those decisions were allowed to stand. Accordingly leave should be granted, the appeal allowed, and appropriate variations to the existing orders made. I decline to award filing fees for this application.
As the learned Adjudicator recognised, the landlords’ prospects of enforcing the award are not particularly promising. So the result of this appeal may well be academic. Nevertheless, it must be decided on its legal merits.
Orders
1. Leave to appeal is granted
2. The appeal is allowed
3. The orders made by the tribunal on 3 December 2013 are varied to read as follows:
It is ordered that the Respondents pay to the Applicants the sum of $6,486.29 made up as follows:
Rental arrears of $5,350.00
Filing fee $101.40
Compensation in the amount of $3,174.89
Less bond paid to lessors $2,140.00.
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