Rent Reduction vs Compensation: Appeal tribunal provides further clarity

In the August 2019 issue of the REIQ Journal, we revisited the topic of rent reduction vs compensation under the Residential Tenancies & Rooming Accommodation Act 2008 (Qld) (RTRA Act) and the decision by the Appeal Tribunal in Bourke v Kenjad Rentals[1]. In the recent decision of Gould v Mazheiko & Gill[2], the Appeal Tribunal has again considered the interaction between Sections 94 and 419 of the RTRA Act.

Let's recap the case. The applicant was a tenant of a property owned by the respondents, who brought a claim against the them for $11,430 as either rent reduction, pursuant to Section 94 of the RTRA Act, or compensation, pursuant to Sections 419 and 420 of the RTRA Act, for alleged damage to her belongings, pest control, carpet cleaning and unlawful entry during her tenancy.  

The claim was initially struck out for want of prosecution, with the Acting Magistrate stating, "Section 94 is operational, provided that you take action within six months of becoming aware of it...I accept that you haven't complied with Section 419 Subsection (3) because the items that you've listed in your claim, you've become aware of priorto 16 [sic] months."[3]  

The applicant's appeal was heard on the basis that the Acting Magistrate erred in determining there is a six month time limit to apply under Section 94 of the RTRA Act. In considering whether leave to appeal ought to be granted, the President of QCAT, Justice Daubney, noted some earlier decisions of the Tribunal and Appeal Tribunal had concluded that the six month time limit does not apply to claims for rent reduction under Section 94 of the RTRA Act, meaning any such claims could also be brought after the termination of the lease[4]. However, other decisions from the Tribunal and Appeal Tribunal found that an application for rent reduction can only be brought during the term of a tenancy[5].  

In light of the discrepancies, Justice Daubney granted leave for the applicant to appeal, noting that in Grace & Ors v Metrocity Realty & Ors[6], the Adjudicator held that the time frame in Section 419 of the RTRA Act did not apply to the rent reduction regime under Section 94. In Masinello v Parker & Anor[7], the Sessional Member sitting as the Appeal Tribunal held that there was no six month time limit, as Section 94 was silent as to whether a claim should be brought within a particular time.  

Justice Daubney states these decisions and other cases that have followed them are not controversial in determining the time limit under Section 419 of the RTRA Act does not apply to a rent reduction claim under Section 94. However, the real question for determination by Justice Daubney was whether a rent reduction claim under Section 94 of the RTRA Act could be brought after the termination of the tenancy.  

Justice Daubney noted in Hurst v Pyatt[8], the Member referred to the earlier Appeal Tribunal decision of Campbell v Donker,[9] which held that Section 94 of the RTRA Act only permits a decrease in rent rather than lump sum compensation. Therefore, the Member inferred Section 94 only operates prospectively for a tenant to apply for a reduction in their rent while the tenancy continues or until the Lessor rectifies the issue.  

In Champion & Anor v Laterma Pty Ltd & Ors[10], the Adjudicator agreed with the decision in Hurst v Pyatt and added that Section 94 of the RTRA Act is worded in the present and future tense rather than the past tense. The Adjudicator also recognised that Section 94, unlike Section 419, does not state that an application might be made after the end of the agreement.  

In Bourke v Kenjad Rentals, Justice Carmody concluded a tenant must apply for a rent decrease during the period of a tenancy. His Honour stated, "Sections 419 and 420 of the RTRA Act are for the purpose of monetary compensation for non-performance or a breach of obligations regardless of loss or enjoyment, whereas a rent reduction under Section 94 focuses on fairness and derives from the theory of unjust enrichment and the equitable doctrine of abatement, not compensation."[11] Justice Carmody further noted, "Although it is not time limited, the right to apply [for a rent reduction] logically lapses with the obligation to pay rent".[12]  

In this instance, Justice Daubney aligned himself with the views of Justice Carmody and added that as a matter of logic, applications under Section 94 of the RTRA Act must be limited to being made during the tenancy, as the legislative intention was not to limit claims to a six month period as it had done for compensation claims. Accordingly, the Appeal Tribunal confirmed claims under Section 94 of the RTRA Act may only be brought during a tenancy and not after a tenancy has expired. Although the reasons for the Acting Magistrate initially dismissing the applicant's claim were incorrect, Justice Daubney held the outcome was correct.  

The Appeal Tribunal has now delivered two recent decisions in Bourke v Kenjad Rentals and Gould v Mazheiko & Gill, confirming claims under Section 94 of the RTRA Act may only be brought during a tenancy and not after a tenancy has expired. It's hoped these decisions clarify not only the interpretation of Section 94 but the interaction with Sections 419 and 420 of the RTRA Act and will lead to a decrease in claims by tenants seeking compensation by way of a rent refund at the end of their tenancy for issues that arose during their tenancy.

[1] [2019] QCATA 81.

[2] [2020] QCATA 10.

[3] Ibid [5].

[4] Grace and Ors v Metrocity Realty and Ors [2012] QCAT 663; Masinello v Parker & Anor [2013] QCATA 325; North South Real Estate & Anor v Kavvadas [2017] QCAT 306.

[5] Hurst v Pyatt [2017] QCATA 101; Champion & Anor v Laterma Pty Ltd & Ors [2018] QCAT 392; Bourke v Kenjad Rentals [2019] QCATA 181.

[6] [2012] QCAT 663.

[7] [2013] QCATA 325.

[8] [2017] QCATA 101.

[9] [2013 QCATA 6.

[10] [2018] QCAT 392.

[11] [2019] QCATA 81 [16].

[12] Ibid.