Application for rent reduction for loss of amenity dismissed on appeal

In this article, we consider a recent decision of the Queensland Civil and Administrative Tribunal regarding a claim for rent reduction for loss of amenity under the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (the RTRA Act) [1].

The Claim

The respondents in this matter rented a property managed by the applicant agency for a fixed term commencing on 21 October 2022 and ending on 21 April 2023.  During the tenancy, the respondents experienced various maintenance issues, including issues with an air conditioning unit at the property, which broke down in November 2022 and was not repaired until 9 January 2023.  The air conditioning unit broke down again on 13 February 2023 and was not repaired before the tenancy ended.  

The respondents filed an Application for Minor Civil Dispute – Residential Tenancy Dispute on 1 June 2023, claiming compensation in the amount of $10,000 pursuant to:

(a) section 169 of the RTRA Act for “loss of amenity, a service or facility”; and 

(b) section 94 of the RTRA Act for “rent decrease – premises are partly unfit to live”.

At first instance, the Adjudicator ordered that the applicant pay to the respondents the sum of $3,500 as a “lump sum figure” as compensation for the “inconvenience and discomfort and annoyance” or “loss or amenity” suffered by the respondents as a result of the lack of any or any adequate air conditioning in the upper level of the property.
It was not disputed that the lessor acted reasonably in responding to maintenance requests.

Section 94 of the RTRA Act 

Section 94 of the RTRA Act provides, relevantly, that, if:

(a) the premises are destroyed, or made completely or partly unfit to live in, in a way that does not result from a breach of the agreement [2]; or 

(b) services, facilities or goods to be provided to the tenant under the agreement are no longer available or are withdrawn other than because the tenant failed to meet the tenant’s obligations under the agreement [3]; or 

(c) the amenity or standard of the premises decreases substantially other than because of malicious damage caused by the tenant [4],
  
the rent payable under the agreement decreases accordingly or, if an order for a decrease in the rent is made by a tribunal, to the extent stated in the order.
 
Agents will be aware that the Appeal Tribunal has consistently concluded that an application for relief under section 94 of the RTRA Act may only be brought during the tenancy period [5].

In this matter, Appeal Tribunal agreed and adopted the observations of Justice Daubney, president, in Gould v Mazheiko & Gill [2020] QCATA 10 at [15]-[20], including his Honour’s agreement with the reasons and conclusions of Justice Carmody in Bourke v Kenjad Rentals [2019] QCATA 81 at [17] as follows (footnotes omitted):

“In Bourke v Kenjad Rentals, Carmody J reached the conclusion that the tenant must apply for a rent decrease during the tenancy. His Honour contrasted the purpose of the monetary compensation regime under ss 419 and 420 with rent relief under s 94, stating that the former provides a legal remedy for non-performance of breach of tenancy obligations regardless of loss of enjoyment, while rent reduction focusses on fairness, not fault and derives from the restitutionary theory of unjust enrichment and the equitable doctrine of abatement, not the law of compensation. His Honour considered that rent reduction is intended to be prospective and temporary. The rent payable decreases to reflect the diminished amenity or standard of the premises, pending their remedy. He said that ‘although it is not time limited, the right to apply [for a rent reduction] logically lapses with the obligation to pay rent’.”

Accordingly, the Appeal Tribunal concluded that, in circumstances where dispute resolution was not requested until after the tenancy had ended, any claim based upon loss of amenity (without breach) ought to have been dismissed as having been brought out of time [6]. 

 

Section 169 of the RTRA Act 

Section 169 of the RTRA Act provides: 

(1) This section applies if the lessor and tenant do not agree about:

(a) the amount of the lessor’s outgoings for a service charge payable by the tenant; or 

(b) the amount of the reduced rent payable under the agreement because a service or facility ceases to be available for use by the tenant.

(2) Either party may apply to a tribunal for a decision about the amount payable. 

(3) For an application about outgoings, the tribunal may, in addition to deciding the amount of the outgoings payable by the tenant, make an order requiring payment of the amount by the tenant. 

(4) In deciding an amount payable by a tenant for outgoings for a water service charge, the tribunal must have regard to the following:

(a) relevant available information about water usage and charges for premises in the local government area in which the relevant premises are situated;

(b) the area of the relevant land; 

(c) any terms of the agreement affecting the amount of water used; 

(d) the presence or absence of water saving devices in the premises; 

(e) the number of persons occupying the premises; 

(f) the quantity of water for which the lessor should reasonably be liable; 

(g) anything else the tribunal considers relevant. 

(5) For an application about reduced rent, the tribunal may, as well as deciding the amount of the reduced rent payable under the agreement, make any order it considers appropriate about rent paid, or payable, under the agreement.

The Appeal Tribunal found that the respondents were not entitled to an award of compensation under section 169 of the RTRA Act because they considered that the facts relied upon by the respondents did not fall within the scope of section 169 of the RTRA Act, and an application must be made during the tenancy period (similarly to the operation of section 94) [7]. 

In reaching this conclusion, the Appeal Tribunal considered that the air conditioning  at the property was not a ‘service’ or ‘facility’ within the meaning of subdivision 2 of Division 1 of Part 5 of Chapter 2 of the RTRA Act (which is where section 169 is found) [8]. 

Pursuant to section 164 of the RTRA Act, a ‘service charge’ is, relevantly:

(a) a charge payable by a person as an owner or occupier of premises for electricity, gas or water supplied to the premises [9]; 

(b) a charge payable by a person as owner or occupier of premises for another service or facility, prescribed under a regulation, supplied to, or used at, the premises [10]; or 

(c) an amount payable by a person for water fit for human consumption supplied to the premises by delivery by means of a vehicle [11].  

That is, the Appeal Tribunal considered that, on a proper construction of section 164: 

(a) each of electricity, gas and water is a ‘service’ or ‘facility’; and 

(b) for the purposes of Subdivision 2, any other ‘service’ or ‘facility’ must be prescribed under a regulation [12]. 

The Appeal Tribunal also considered that a rent reduction claim under section 169 is substantially similar to a rent reduction claim under section 94, being a remedy focussed on fairness, not fault and on equitable principles rather than the law of compensation.  As such, similarly to section 94 of the RTRA Act, the Appeal Tribunal concluded that the respondents’ application was made out of time insofar as they sought relief under section 169 of the RTRA Act [13]. 

Conclusion 

In light of the above, the Appeal Tribunal concluded that the compensation awarded to the respondents at first instance was made in error [14]. The Appeal Tribunal found a substantial injustice to the applicant on account of the Adjudicator’s error and granted the applicant leave to appeal. 

Ultimately, the Appeal Tribunal elected to set aside the decision at first instance and substitute it with a decision  dismissing the application filed by the respondents [16].  

This decision is a useful reminder that claims for rent reduction for loss of amenity under section 94 of the RTRA Act must be brought within the tenancy period.  It further establishes that claims for rent reduction under section 164 of the RTRA Act must also be brought within the tenancy period and must relate to service charges or the cessation of electricity, gas, water or any other ‘service’ or ‘facility’ prescribed under a regulation. 

Read more: Best practice for using the RTA Form 22 Rental Application.

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