QCAT: Urgent Application and Refund of Bond and Compensation

Drew Lauchland

2 Jul, 2014

A decision of QCAT considered the question whether on an urgent application the Tribunal had the power to order refund of bond and/or compensation.

In Big4 Brisbane Northside Caravan Village v Mark Christopher Schliebs [2012] QCAT 277, the President, Justice Alan Wilson, was asked to consider on reference a question of law as to whether in a case where the Tribunal makes a termination order on an urgent application where there has been no conciliation by the Residential Tenancies Authority (‘RTA’) and, at the hearing of the urgent application, the lessor demonstrates conclusively that there are monies owing by the tenant as at the date of termination such as rent arrears, and monies owing for water, power or utilities, does the Tribunal have jurisdiction at the hearing to make an order that the tenant pay the lessor (or the lessor’s agent) those amounts; and, if the amounts equal or exceed the amount of the bond held by the RTA, does the Tribunal have jurisdiction at the hearing to release the bond in full to the lessor or lessor’s agent in complete or partial satisfaction of an order of that kind.

Section 415 of the Residential and Rooming Accommodation Act 2008 (‘RTRA Act’) provides that an application to QCAT is an urgent application if it is an application for termination order made, among other things, because of failure to leave. There are other categories that qualify as urgent applications.

Under section 416(1) of the RTRA Act, a lessor or tenant under a residential tenancy agreement may apply to QCAT only if the applicant has first made a dispute resolution request about the issue.

However, under section 416(2) that condition does not apply to an urgent application.

His Honour stated that the ancillary claims for rent etc. did not qualify as urgent applications under section 415 of the RTRA Act. He therefore reasoned that they were caught by section 416(1) of the RTRA Act and therefore non-urgent applications which required dispute resolution through the RTA before the jurisdiction of QCAT could be enlivened.

It is interesting to note that his Honour goes on to say:

“..that the Tribunal should deal with matters in a way that is accessible, fair, just, economical, informal and quick; and, the fact that the Tribunal’s functions, expressed in s 4(c) of the QCAT Act, include an obligation to ensure that proceedings are conducted in an informal way that minimises costs to parties, and is as quick as is consistent with achieving justice”.

He later says, in response to his decision that orders for compensation for rent arrears or refund of bond cannot be made on urgent applications:

“I appreciate this adds an additional burden to applicants seeking both urgent, and non-urgent, remedies in RTRA matters”.

Yes, it does, and the question has to be asked why the change in direction? Since the inception of QCAT there have been hundreds of Orders made on termination applications where the tenant has been ordered to pay arrears of rent up to the date of the Order and the bond has been ordered to be paid to the lessor in par satisfaction of that Order.

Additionally, the legislation has not changed that dramatically from the time of the Small Claims Tribunal.  If it was an urgent application you could apply to the Tribunal without seeking dispute resolution from the RTA, otherwise you had to lodge your Form 16 RTA dispute resolution request.

The Small Claims Tribunal had no hesitation whatsoever in making orders on urgent applications for termination and an order for possession and compensation for rental arrears and refund of the rental bond.

Jurisdictions on other States of Australia take the same approach. On an application for Order for termination it is usual for an Order to be made that a lump sum order be made for rental arrears to the date of the hearing and for the bond to be refunded to the lessor in partial satisfaction of that Order (NSW goes a step further and also orders a daily occupation fee be payable up to the date possession of the premises is given).

With respect, we disagree with the reasoning of the President of QCAT.

His Honour makes note in this decision that the RTRA Act, clearly prescribes the procedures to be followed and, to the extent of any inconsistency between the procedure and the provisions of the QCAT Act, the enabling Act prevails.

That being so, what about section 61 of the QCAT Act.

Relevantly it provides:

“The Tribunal may, by order –

  1. waive compliance with another procedural requirement under this Act, or an enabling Act or the rules.”

The RTRA Act is an enabling Act, and the requirement for dispute resolution through the RTA for non-urgent application is a procedural requirement. Section 61 therefore gives jurisdiction to the Tribunal to waive that requirement, albeit by the use of the word ‘may’, it is clearly a discretionary exercise of the power by the Tribunal.

The fact that section 61 can be used ‘to waive compliance with procedural requirements’ was expressly referred to by the Tribunal in its appellate jurisdiction in Ocean Blue (Qld) Realty v Widdup [2011] QCATA 216.

A majority of these urgent applications the reason for making the application is that a Notice to Leave (Form 12) has been given for failure to comply with a Notice to Remedy Breach (Form 11), invariably issued on the basis of failure to pay rent.

Many urgent applications made to the Tribunal are for orders for termination of the tenancy and possession of the premises (a warrant of possession). Again in a majority of these urgent applications the reason for making the application is that a Notice to Leave (Form 12) has been given for failure to comply with a Notice to Remedy Breach (Form 11), invariably issued on the basis of failure to pay rent.

By the time the application is set down for hearing in QCAT, the amount of rent that is outstanding is usually between 4 – 6 weeks. This reference to the time delay for hearing of applications is not meant as a criticism of QCAT as we recognise that QCAT is limited in the resources that it is afforded by the current government.

However, no matter what the machinations may be by the time the landlord ultimately obtains a hearing for the urgent application, the rent outstanding has escalated from somewhere between 4 – 20 weeks. That landlord has therefore been out of pocket for that income for that period of time. That landlord has no doubt in that time had to meet liabilities for a mortgage, rates and insurance – with no income.

That landlord needs an income to service these debts. If the tenant has not paid the rent, remains in the property, forcing the landlord to make application for a possession order, and does not pay rent (invariably the case), the landlord has to rely on other sources of income to service these debts. Some landlords do not have the ability to do this without the rental income.

We were once informed of a decision in the CTTT in NSW where there Tribunal Member confronted with a situation where the tenant had to be evicted gave a decision in favour of the tenant giving the tenant extreme leniency in paying the debt ($10.00 per fortnight for a $5,000 debt)  and made the comment that if a landlord could not afford to suffer a loss in a residential tenancy the  they should not have an investment property. Such a comment is elitist and ignorant of the realities of investment in residential property.

The fact of the matter is that owners of properties used for rental, purchase those properties for the purpose of a positive return. No one could argue with that.

What in fact occurs is that once QCAT makes an order for termination of the tenancy and possession of the premises, the landlord has to wait  for the warrant to be executed. In the meantime the tenant is not paying rent. Once it is executed the landlord needs money to clean the premises, carpet clean etc. The landlord has an obligation under the RTAR Act to mitigate the loss. In many instances, the landlord does not have the money at hand to do this.

Therefore, the bond moneys should be refunded to the landlord to at least allow the landlord to get the property back into a condition fit for rental and to get the premises in condition to re-lease.

It is also why the Tribunal should make an Order at the time of the possession Order  for payment of all arrears of rent up to the date of the hearing, so that at least the landlord can then commence recovery proceedings. We would actually go a step further and say that The Tribunal should even go further and Order that the tenant also pay a daily occupation fee up to the date possession of the premises is given to the landlord, which is commonly the practice in the Consumer, Trader and Tenancy Tribunal in New South Wales.

We certainly acknowledge that there are instances where a landlord will seek to claim an amount from a tenant which is not properly claimable or which, for instance, has not considered fair wear and tear.

The dispute resolution process through the Residential Tenancies Authority serves a very useful purpose. It assists the parties in attempting to resolve matters between them when there is a genuine dispute between them. Usually however those disputes relate to such things as cleaning, pest treatments, repairs, maintenance, gardening etc. We certainly acknowledge that there are instances where a landlord will seek to claim an amount from a tenant which is not properly claimable or which, for instance, has not considered fair wear and tear.

Those matters correctly should be the subject of dispute resolution before involving the Tribunal. If the parties cannot resolve the matter through the dispute resolution process, then either may then have the matter brought before the Tribunal as a non-urgent matter.

However, on an application for a possession order, as was the case in Big 4, none of these matters were under consideration. The only issue was that of the rent that had not been paid by the tenant. It was not disputed that it was outstanding. It could be proved by the rental ledger.

If the tenant did have a genuine dispute about the rental, such as claiming abatement because of services which had not been provided or on grounds of the premises not being fit for habitation, then the RTRA Act provides procedures for the tenant to follow.

However, as we have said previously, invariably on the hearing for a possession Order there is no dispute about the rental that is outstanding.

The problem that the decision in Big4  presents is that the landlord now has to wait until the tenant has vacated and then lodge the request for the bond refund. If the tenant does not dispute the bond refund, given the best scenario, the earliest that the landlord is likely to see the bond refund is at least about 35 days (five weeks) after the termination order is made by the Tribunal.

Moreover, if there is an amount of rental owing exceeding the bond, the landlord then has to lodge the Form 16 Dispute Resolution request with the RTA. If the matter cannot be resolved by the RTA  the landlord then has to make application to the Tribunal as a non-urgent matter. In some registries you can wait for up to three months to obtain a hearing date on non-urgent matters.

The learned President alludes to this scenario where he states:

“It is possible to discern, behind the learned Adjudicator’s reference, a proper concern that applicants might, in the circumstances at hand, be compelled to bring two applications, involving unnecessary duplication: first, an urgent application for a termination order (which did not need to undergo the RTA conciliation process); and, separately, an application for the arrears of rent, etc. (which did require the application of the RTA reconciliation process); or, to attend for separate hearings if the application combines the two.
The result would be that the Tribunal (and parties) would be obliged to submit to two discrete adjudications in circumstances where common sense and practicality might suggest that only one should be necessary.
Those concerns are appropriate in light of the legislature’s announced object, set out in s 3 of QCAT Act, that the Tribunal should deal with matters in a way that is accessible, fair, just, economical, informal and quick; and, the fact that the Tribunal’s functions, expressed in s 4(c) of the QCAT Act, include an obligation to ensure that proceedings are conducted in an informal way that minimises cost to parties, and is as quick as is consistent with achieving justice”.

We totally agree with the learned President’s comments. Firstly, commonsense should prevail and there should not be the necessity for two separate adjudications and, secondly, the objects of QCAT should be followed – ie procedures that are fair, just, economical and quick.

One may ask – why are we making an issue of this? The reason is that we are now experiencing too many landlords saying ‘this is too much. I need the bond money to get the property back to a tenantable state.  I need an order that the tenant pay the rent that they should have paid so that I can start recouping some of my losses.’

Many a time we have heard the statement by landlords that because of issues such as the one under discussion that they would be better off divesting themselves of the rental property and investing in other opportunities.

That attitude has the potential to cause a huge problem. The pool of rental properties in this country is primarily provided by private investors. If those investors decided, for reason of red tape and lack of due consideration for common sense solutions, to withdraw from the private rental market where we would we be. Well firstly, we would have a diminution in the number of private rental properties available for rent. How would that problem be solved given that our homeless situation is already in an appalling state. It would mean that the government would have to find extra funds to provide public housing. Ultimately of course that means the taxpayer.

Furthermore the property management industry supports tens of thousands of people in employment – directly and indirectly.  Not only property managers, but administrative support staff and the people who are employed to maintain the properties.

The decision in Big4 is wrong. We are of the opinion that the Tribunal does have the jurisdiction to make orders at the time of the hearing of the application for  termination order for payment of the bond to the landlord and for an order for payment of all rental outstanding to the date of the hearing.

The problem however, as a result of this decision, is that the question of law was referred to the President and section 117 of the QCAT Act provides that once the President decides on the question of law, then that decision is the decision of the Tribunal. Therefore, every member of the Tribunal, whether legally qualified or not, is bound by this decision, unless either (a) the President revisits the question and decides differently, or (b) a similar matter is appealed to the Tribunal in its appellate jurisdiction and a different decision is made

We would urge anyone applying to the Tribunal for an urgent application for a termination order, to apply for an order for refund of the bond and for an order for payment of rent to the date of the hearing, using the argument we have outlined here that the Tribunal does have the power to waive compliance with the requirement for dispute resolution. Either the Tribunal will accept that the issue raised is different to the decision in Big4 and proceed accordingly or will decide to again refer the matter to the President for further determination.

If anyone is prepared to take this step, always remember that Barclay MIS are here to assist, as part of the services we offer.

In the meantime, however, we will be taking submission to the government on legislative changes to overcome this issue, which again is part of the pro-active approach taken by Barclay MIS in supporting the property management industry.

 

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