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Rent Decreases - Residential Tenancy Laws in Queensland

Under s 94 of the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (“the Act”) a tenant may apply to a tribunal for a rent decrease if 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; or

  • no longer may be used lawfully as a residence; or

  • are appropriated or acquired compulsorily by an authority; or

  • services, facilities or goods to be provided to the tenant under the agreement are no longer available or are withdrawn other than because the tenant failed to meet the tenant’s obligations under the agreement; or

  • the amenity or standard of the premises decreases substantially other than because of malicious damage caused by the tenant.

For those reasons, it is not uncommon for a tenant to bring an application to the Queensland Civil and Administrative Tribunal (“QCAT”) where a lessor directly, or indirectly through their agent, advertises services or facilities which are not provided to the tenant or fails to meet their obligations under s 185 of the Act which includes duties at the start and during the tenancy:

  • maintain the premise in a way that the premises remain fit for the tenant to live in;

  • maintain the premises and inclusions in good repair;

  • ensuring a law that deals with health and safety of persons entering or using the premises is complied with;

TIME LIMITATION


Section 419(3) of the Act sets out that an application for a rent decrease must be made within 6 months after the lessor or tenant, or provider or resident, becomes aware of the breach.


Despite the statutory limitation, common law seems to suggest varying time limits for rent decreases under s 94 of the Act.


In McFarland v Department of Transport and Main Roads [2014] QCAT 284, Members Collier and Kirby with a Justice of the Peace concluded that s 419(3) of the Act applies to rent decreases under s 94. This has also been applied in many other relevant precedents.


In stark contrast to the above, in Grace and Ors v Metrocity Realty and Ors [2012] QCAT 663, Adjudicator Jeremey Gordon at paragraph [50] – [57] reviewed the history of s 94 of the Act and concluded:

… the 6 months time limit does not apply to section 94 reduction of rent matters, even if the reduction of rent arises because of a breach by the owner. Instead it would appear that the correct time limit for such matters is 6 years under s 10(1)(d) of the Limitations of Actions Act 1974 (limitation period in case of an action to recover a sum recoverable by virtue of any enactment).

Further, in KTK Property Management v Ho [2015] QCATA 6, Senior Member OAM stated at paragraph [14]:

A claim under s 94 is not limited to a six-month time limit in the same way as a claim under s 419.

Similarly, in Masinello v Parker & Anor (No. 2) [2013] QCATA 325, Member Forbes indicated at paragraph [13] that the learned Adjudicator based his decision in the originating case on the fact that s 94 is not subject to the time limit attached to s 419 of the Act. Member Forbes went on to say:

I see no appellable error in his application of section 94 [relating to applying a longer time limitation of 6 years].

From a practical perspective, however, it should be noted that QCAT Adjudicators have wide discretion and often apply the time limit imposed under s 419(3) of the Act and the 6-year time limit under common law interchangeably. This often leads to confusion and injustice between members of the community seeking a rent decrease.


QUANTIFYING DAMAGES


In quantifying the likely damage of this nature, most practitioners will advise a tenant to overreach having regard to reason and allow an Adjudicator to reduce the claim accordingly at their discretion. Subsequently, when advising a lessor or agent, a practitioner (depending on the merits of the case) will often advise them to argue that the tenant has been tardy in bringing the claim. Subsequent advice is usually given to seek a reduction in the claim as the tenant ought to have brought the claim in a reasonable time therefore mitigating loss or expense to the lessor as required by s 362(1) of the Act read together with s 363(3). The later section relating to the preclusion of compensation for any loss or expense that could have been avoided by taking necessary steps.


That aside, there is arguably no real way to determine the likely quantum of damages under s 94 of the Act. In Wechsel v Andrew (No 3) [2011] QCATA 106, Justice Alan Wilson [referring to s 94] stated:

It is not apparent from the section that a precise mathematical formula for calculating the reduction in amenity must be created, and applied. The exercise would be artificial, and is not necessary. The section requires a determination whether there has been a ‘substantial’ reduction and, if so, a reduction in rent calculated ‘accordingly’. Like the former, the latter is a matter of degree.

In reality, it is often difficult to determine the quantum of damages as it is subjectively based on the extent of the ‘substantial’ reduction in amenity. Notably, in some cases, if an agent has advertised air-conditioning and the tenant later finds out it does not work or exist, it is not uncommon for a tenant to seek a 5 to 10 per cent (%) rent decrease subject to the degree of reduction in amenity based on the personal needs or health of the claimant. Otherwise, in extreme cases of premises being completely unfit to live in, it is not uncommon for a tenant to seek a 50 - 90 per cent (%) reduction in rent. In contrast to other extreme cases involving an inability to use a shed, damaged tiles and linoleum, blocked gutters, broken cupboards and so on, it is not uncommon for a tenant to claim and be awarded between 15 to 50 per cent (%) reduction in rent.


Relevantly, depending on whether the presiding QCAT Member(s) will apply the 6-year time-limitation, retrospective rent decreases can sometimes be backdated from the commencement of the lease. In some cases, rent decreases have been backdated 3-4 years. The claim would, however, be reduced based on the tenant being tardy. Alternatively, the claim may even be extinguished altogether depending on whether the tenant has taken reasonable steps to mitigate loss or expense as required by the legislature.


It should be noted that there is a line of authority, including Campbell v Donker [2013] QCATA 6, that stipulates s 94 of the Act cannot be used to obtain a lump sum compensation arising out of the breach of the tenancy agreement. Rather, Adjudicator Jeremy Gordon in Grace and Ors v Metrocity Realty and Ors as above eloquently defines the objective of rent decreases at paragraph [51]:

A decrease in rent under section 94 does not necessarily result in a payment of money or compensation. If the tenant owes the landlord money, it would result in a reduction in the amount owed or even its extinguishment.

It should also be observed that where a tenant is in credit at the end of the tenancy, they may be owed a refund at the conclusion of the lease agreement. This is irrespective of whether the credit was the result of the rent decrease. This is understandable considering the rent decrease is simply a mechanism to adjust the parties position having regard to the standard of the premises during the time in which the tenant was overpaying rent by virtue of the circumstance giving rise to the reduction in amenity.  


CONCLUSION


Lessor’s or their agents should be cautious in ensuring that they meet their obligations under the Act as there is an increase in the number of applications brought by tenants seeking a rent decrease. Some claims are in excess of $5,000.00, which can have a detrimental effect on the financial situation of a lessor.


If you are a lessor or agent and require further information on your rights or obligations under the residential tenancy legislation, you should make contact to an Australian Legal Practitioner who specialises in residential tenancy law. Alternatively, if you are a tenant, there are a number of free organisations which can provide you with advice or advocacy services.


Disclaimer: This publication is not intended to be comprehensive nor does it constitute legal advice. We are unable to ensure the information is current and there is no guarantee in relation to accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this publication.


© Scott A. Green, Associate Solicitor

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