Unjust enrichment in the context of residential tenancies

Unjust enrichment occurs when one party derives a benefit at the expense of another without proper basis or legal justification. Where unjust enrichment is established, the party deriving the unfair benefit may be required to make restitution to the injured party.

A claim for remedy arising from unjust enrichment will be actionable where the following three elements are established:

1. the respondent received a benefit;
2. the benefit was at the expense of the applicant; and
3. the circumstances make it unjust for the respondent to retain the benefit.

As to whether, or not, the respondent’s retention of the benefit would be ‘unjust’, a Court will have regard to whether there was a mistake, duress, or illegality which brought about the respondent’s receipt of the benefit.

The recent case summaries set out below provide examples of how a situation of unjust enrichment may arise within the context of residential tenancies.

Hughes v Fogarty & Anor [2026] QCATA 18

In this matter, at first instance,^[1] the Queensland Civil and Administrative Tribunal was required to determine a claim brought by the tenants of a residential unit owned by the respondent lessor, Merryn Hughes. The tenants had entered into a fixed-term lease which was due to expire on 20 August 2020. The tenants were New Zealand citizens residing in Australia for employment purposes.

In early 2020, the COVID-19 pandemic caused the termination of one of the tenant’s employment. Given the impending closure of international borders, the tenants decided to return to New Zealand before re-entry became impossible. The lessor agreed to the tenants’ early departure subject to their payment of rent up to the end date for their fixed-term tenancy. The tenants agreed to the term imposed by the lessor and paid rent in advance through to the end of the fixed-term.

After the tenants’ departure, the lessor permitted certain of her friends to occupy the property prior to the expiration of the tenants’ fixed term tenancy.

The tenants subsequently lodged an application in the Tribunal, seeking a refund of rent from the date that the third parties first commenced occupation of the property. The Tribunal ordered the lessor to refund the rent paid by the tenants on that basis.

The lessor later applied to the Queensland Civil and Administrative Appeals Tribunal (Appeals Tribunal),^[2] seeking leave to appeal the decision at first instance, arguing that the tenants’ departure terminated their possessory rights and, so, she was entitled to retain the rent paid.

The central issue before the Appeals Tribunal was whether the lessor was entitled to retain rent paid for the balance of the lease term after allowing third parties to occupy the property, or whether doing so constituted unjust enrichment, requiring restitution to the tenants.

The Appeals Tribunal dismissed the application for leave to appeal, upholding the primary Tribunal’s decision, on the basis of unjust enrichment. The Appeals Tribunal emphasised that unjust enrichment is now established as a cause of action at common law, having emerged from equity and adapted into the common law of restitution.

Quoting Brennan J in David Securities Pty Ltd v Commonwealth Bank of Australia,^[3] the Appeals Tribunal observed that:

It is clear that any civilised system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is to prevent a man from retaining the money or of some benefit derived from another which is against conscience that he should keep.^[4]

Critically, the Appeals Tribunal rejected fine distinctions based on how the benefit was obtained, observing:

If the ground for ordering recovery is that the defendant has been unjustly enriched, there is no justification for drawing distinctions on the basis of how the enrichment was gained, except in so far as the manner of gaining the enrichment bears on the justice of the case.^[5]

In this case, the Appeals Tribunal found that, on the lessor’s own admissions, she had accepted a benefit that morally, if not legally, amounts to unjust enrichment.^[6]

The enrichment identified by the Appeals Tribunal was not merely the receipt of the rent, but the retention of rent coupled with the use of the leased property for the lessor’s own purposes during the unexpired lease term. In particular, the Appeals Tribunal found that, by permitting third parties to occupy the property without the tenants’ consent during the period in which the tenants’ had paid rent, the lessor had appropriated the tenants’ leasehold interest for her own gain. The circumstances were described as sufficiently “high handed” such that it would be unjust for the lessor to retain the benefit.^[7]

The Appeals Tribunal ordered the lessor to pay restitution to the tenants equal to the rent paid by the tenants from the date upon which the third parties commenced occupation of the property, through to the expiration of the tenants’ fixed-term lease. 

Park v Saechun [2025] QCATA 118

The matter of Park v Saechun^[8] involved a dispute concerning the lease of the lower level of a two-storey house at Southport.

The applicant (acting as agent for the lessor) entered into a General Tenancy Agreement with the respondent (the tenant) on 16 July 2023 for a 12-month term commencing 22 July 2023.

The property was initially let at $500 per week but later increased to $650 per week after the applicant agreed that the tenant could operate a massage business from the property. With the applicant’s consent, the tenant undertook renovations to facilitate the massage business, incurring costs of $2,450.

After the renovations were complete, the tenant had wished to register her business but was instructed by the applicant not to do so, for reasons that he, or the lessor, would be penalised for permitting the tenant to occupy the lower level of the property.  On that basis, the tenant terminated the lease and vacated the property on or about 1 December 2023.

On 5 February 2024, the applicant commenced proceedings in the Minor Civil Disputes (Residential Tenancy) jurisdiction of the Queensland Civil and Administrative Tribunal, claiming outstanding rent, a break-lease fee and repair costs totalling $2,000. 

The tenant filed a counter-application seeking a refund of all rent paid up to the date of her vacating the property, plus rent paid in advance, reimbursement of the renovation costs, and refund of the rental bond deposit, given that there existed a legal impediment to her occupation of the property.

At first instance, the Tribunal ordered full restitution in the sum of $16,490.50. However, the lessor appealed that decision, requiring the Appeals Tribunal to determine whether:

1. the unlawful occupation of the lower level for the massage business constituted a “legal impediment” under s 181 of the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (RTRA), thereby entitling the tenant to terminate the agreement and obtain remedies, and
2. as a consequence of the illegality, the lessor was unjustly enriched and required to refund all rent paid or the cost of improvements made by the tenant.

The Appeals Tribunal upheld the decision that the unlawful use of the property was a legal impediment within the meaning of section 181 of the RTRA, which provides that:

(1) The lessor must ensure there is no legal impediment to occupation of the property by the tenant as a residence for the term of the tenancy.

(2) Subsection (1) applies only to legal impediments the lessor knew about, or ought reasonably to have known about, when entering into the agreement.

The Appeals Tribunal held that the applicant knew, or ought reasonably to have known, of the impediment at the time of letting, particularly given his warning to the tenant not to register the business.

The existence of the legal impediment meant the Tenancy Agreement was frustrated and unenforceable, giving the tenant a right to terminate.

However, the Appeals Tribunal drew a critical distinction in that the right to terminate did not automatically entitle the tenant to a claim for a refund of all rent paid and the costs incurred in renovating the property.

In relation to the rent, the Appeals Tribunal held that restitution would not be just, as the tenant had ‘received what she had bargained for’ during the period of occupation. Relying on the decision in Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498, the Appeals Tribunal emphasised that:

[24] Although the termination of the tenancy agreement by the respondent was lawful given the legal impediment, she was not entitled to a refund of the rent paid. That is because, adopting what was said in Equuscorp it would not be unjust for the “recipient of a benefit [the applicant] under the contract to retain that benefit”. However, it would be unjust for her to receive both the rent and the benefit of the use of the lower-level rent free which is the effect of the adjudicator’s order.

In relation to the renovations, the Appeals Tribunal held that the lessor had been unjustly enriched, by the applicant’s conduct in approving the renovations. This was because the applicant later advertised the property as a two-bedroom tenancy.

[25] As for the costs the respondent incurred because of the improvements, that is a different matter. The applicant now has the benefit of that extra room pursuant to an oral agreement reached between the parties, in circumstances where the applicant knew it was unlawful to let the lower level as a separate residence. There is no doubt he has taken advantage of the improvement because he advertised the lower level as a two-bedroom tenancy…….

[27] Applying the same statement above from Equuscorp with respect to the improvement, it would be unjust for the applicant to retain that benefit as a consequence of the legal impediment under s 181 of the RTRA for which he was responsible

The Appeals Tribunal set aside the original order requiring repayment of all rent and substituted a reduced award, requiring the applicant to pay $4,129.50 to the tenant on account of the costs of renovations, refund of the rental bond deposit and, a refund of the two weeks’ rent paid in advance, plus filing fees.

Key Takeaways for Agents

It is important to note that, where an agent is involved in conduct which may attract an unfair advantage to the detriment of another party, they may be exposed to a finding of unjust enrichment, such that they may be ordered to make restitution.

Relevantly, an obligation to pay restitution on account of a wrongfully obtained benefit is generally uninsurable and, so, will be payable by the agent personally. 

Agents are urged to exercise caution when engaging in transactions in which they reasonably suspect that one or more parties may be engaging in practices designed to bring about an unfair advantage at the expense of another.  Should agents face such a situation, they should seek legal advice at the earliest opportunity. 

Read more from Carter Newell Lawyers: Why accurate and detailed records protect property managers.

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