When an informal agreement amongst family becomes binding and enforceable

In the recent case of Joubert v Fleger and Fleger[1], the Queensland Civil and Administrative Tribunal (the Tribunal) was required to consider whether an oral agreement between family members amounted to a ‘residential tenancy agreement’.

The Tribunal had to determine whether, for the purposes of the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (RTRA Act) and the Residential Tenancies and Rooming Accommodation Regulation 2009 (Qld) (Regulations), it had jurisdiction to make orders terminating the tenancy agreement. 

Facts

The Applicant (Joubert) is the niece of the Respondents (Fleger and Fleger), who are both aged pensioners.

In early 2017, the Respondents had gifted the Applicant with funds totalling $300,000 to put toward the purchase of a property at which the Applicant and both Respondents intended to reside together. 

The parties had agreed that, until such time as the Applicant had secured a contract over a suitable property for that purpose, the Respondents would reside at a beachfront unit owned by the Applicant and situated at the Gold Coast. The Respondents were not required to pay rent at the unit, however, they agreed to be responsible for body corporate fees and outgoings.

Shortly thereafter, the Applicant purchased a property at Carrara, which comprised a separate ‘granny flat’ which the Respondents had agreed to move into. However, after settlement of the purchase contract, the Respondents decided against moving into that property because they were concerned that they may end up becoming live-in babysitters for the Applicant’s family.

The Applicant sold the Carrara property and retained the gifted funds to put toward the purchase of another property. Once again, the Respondents declined to occupy the newly-purchased property.

In mid-2022, the Applicant fell into financial hardship and informed the Respondents that they would need to move out of the beachfront unit because she wanted to rent the unit out. The Applicant offered to accommodate Mrs Fleger at her own home if Mr Fleger was able to find another place to live. While Mr Fleger initially acquiesced and commenced looking for a property in which to reside, the Respondents later decided that they did not wish to live separately and so, maintained their refusal to leave the beachfront unit causing an irreparable breakdown in the relationship between the Applicant and Respondents.

In August 2022, the Applicant gave notice to the Respondents of her intention to take back possession of the unit and, from that time, she assumed responsibility for all body corporate fees and other outgoings pertaining to the property.

The Applicant initially applied to the Magistrates Court for an order for possession of the unit and a warrant of possession under the Property Law Act 1974 (Qld). As the Magistrates Court did not have jurisdiction to hear that matter, the application was amended to abandon the claim for possession and instead reflected a claim for a declaration that the conditional gift of $300,000 had been satisfied by the Applicant’s purchase of the Carrara property in 2017.

The proceeding was transferred to the District Court and the Respondents sought to defend the Applicant’s claim and filed a counterclaim for equitable compensation secured by charge or lien over the Applicant’s title to the unit until the gifted funds had been repaid, and asserted an estoppel against the Applicant from denying their indefinite right of residency in the unit until the money was repaid to them.

After amending the District Court claim, the Applicant applied to the Tribunal seeking orders for the termination of the residential agreement on grounds of excessive hardship.

In her application to the Tribunal, the Applicant asserted that the oral agreement between the parties amounted to a residential tenancy agreement and that she was entitled to secure orders terminating the tenancy agreement on grounds of excessive hardship.

The Respondents disagreed, arguing that the oral agreement lacked the indicia of a residential tenancy agreement or, in the alternative, if it the oral agreement was found to be a residential tenancy agreement, the Respondents submitted that the application must be stayed pending the outcome of the District Court proceeding. 

The issues for determination by the Tribunal were:

• whether the oral agreement between the parties constituted a residential tenancy agreement in accordance with the RTRA Act such that a notice of termination could be issued and, if so,
• whether concurrent litigation between the same parties in the District Court effected the outcome of the application which had been filed in the Tribunal.

The Tribunal decision

The Adjudicator ultimately found that the oral agreement did constitute a residential tenancy agreement for the purposes of the RTRA Act, and made orders for the termination of the residential agreement with two months’ notice, together with a warrant of possession which was actionable 14 days after the expiration date.

It further held that the trial in the District Court was unaffected by the decision in this case.

Residential Tenancy Agreement

In reaching the conclusion that the oral agreement constituted a residential tenancy agreement, the Tribunal observed that the RTRA Act does not require intent to create a residential agreement, and it is irrelevant that the parties did not turn their minds to creating a formal agreement because the test is whether the arrangement is caught by the provisions of the RTRA Act and Regulations. 

Under the RTRA Act, a lessor is the person who gives another person the right to occupy residential premises under a residential tenancy agreement and the tenant is the person given that right.  The RTRA Act also provides that a residential tenancy agreement is the agreement under which a person gives another person, exclusively or not, a right to occupy residential premises as a resident.

While the Respondents had never paid rent as would ordinarily be required by a conventional residential tenancy agreement, the Adjudicator found that the arrangement by which the Respondents came to occupy the unit was caught by the provisions of the RTRA Act. 

The Tribunal’s jurisdiction to hear the matter was established by the finding that the oral agreement constituted a residential tenancy agreement.

The Adjudicator found that the ground of excessive hardship had been made out because the Applicant had all the liabilities of ownership of the unit but none of the benefits, she was in a dire financial situation, and the breakdown of the relationship between the parties was irretrievable. Additionally, a suitable property that would satisfy the condition of the oral agreement would most likely never be found such that the condition would likely never be satisfied.

On that basis, the Adjudicator held that the proper exercise of the Tribunal’s discretion required termination of the residential tenancy agreement, failing which temporary occupation would become permanent forevermore at the Respondents’ discretion.

Effect of the District Court Case on the QCAT Case

The adjudicator distinguished the facts in this instance from a previous QCAT case of King v King[2] in which it was found that the adjudicator had erred in deciding that an equitable claim had nothing to do with the tenancy claim.

Adjudicator Walsh found that the equitable right, as asserted by the respondents, was inherently different form the right claimed in King.

An application to the QCAT for termination of a residential tenancy is urgent and must be dealt with swiftly, and the assertion that a tenant’s entitlement to litigate for equitable relief in another jurisdiction would require adjournment is inconsistent with the Tribunal’s functions.

The QCAT observed that the equitable remedies remain intact for the respondents if they make out their case in the District Court.  Further, an adjournment of the QCAT hearing, or staying final orders, would have had the impact of wasting the Tribunal’s time and further strain already limited resources.

Take-aways

While this case did not involve a real estate agent, it demonstrates the importance of having well-documented agreements in place to ensure certainty as between the parties.

Similarly, it is crucial that any bespoke terms are drafted by a qualified legal practitioner to ensure that the parties’ intentions are properly reflected within the agreement such as to be binding and enforceable. 

Where ambiguities arise, the terms of any agreement will be interpreted (and enforced) by a Court or Tribunal having regard to the circumstances under which the agreement has been performed, with the potential result that the one or both parties’ intentions may not be upheld.

Read more from Carter Newell Lawyers: Repeated breaches - The importance of following the correct procedure.

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