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A recent test case, RFY v ACV (Residential Tenancies) [2021], gives rise to the first interpretation of the various statutes governing the eviction of residential tenants throughout the COVID-19 pandemic. The Residential Tenancies Act 1997 (RT Act) has been amended significantly throughout the COVID-19 pandemic. Specifically, as will be discussed in-depth throughout this article, Regulation 14 of the COVID-19 Omnibus (Emergency Measures) Transitional Regulations 2021 (Transitional Regulations Act), which extends the operation of section 542 of the RT Act, is interpreted for the first time in this case. It provides a precedent that will likely significantly effect renters and Residential Rental Providers (RRP) alike.
Facts of the Case
The agreement between the renter and the RRP began in June 2015.
At the beginning of May 2020, the rent was $2,216.00 per calendar month.
The rent payment history showed regular payments of rent from June 2015 until March 2020.
The renter confirms that all payments were paid on-time from June 2015 to April 2020.
The renter submitted that due to her work as a rideshare driver, her weekly income significantly dropped from $1,000-1,200 per week to $145 per week as a result of the COVID-19 pandemic.
The renter also received $700 per fortnight from the Newstart program to supplement her income.
The RRP submitted that on 30 June 2021 rent was paid up to and including 25 November 2020. On this basis, the RRP calculated rent owed on 30 June 2021 as $13,872.00
On 7 May 2020 the Real Estate Agency (REA) received an email from the renter seeking a rent reduction (Reduction Request).
The REA provided this reduction request to the RRPs.
On the RRPs instructions, the REA sent a letter on 15 May 2020 which rejected the renter’s request (May Letter). The renter submitted that she never received this May Letter.
The RRP’s rejected the rent reduction proposal on the grounds of their own financial hardship. COVID-19 saw both the RRP’s both lose their own employment. The RRPs provided a Statutory Declaration which described their financial stress due to COVID-19. The RRPs further provided payslips and ATO Notice for Assessments as further proof of their financial difficulties.
After this correspondence, the REA submitted that there were several other attempts to contact the renter ‘to no avail’.
On 26 March 2021, the REA sent an email to the renter which informed the renter of the lifting of the rental moratorium and that tenants are required to make all future rental payments in full and on time. This email further provided that a payment plan will have to be agreed upon for the outstanding balance.
On 30 March 2021, the REA sent the renter a notice to vacate (NTV) via registered post in accordance with section 91ZM of the RT Act. The termination date was 23 April 2021.
The renter then became uncontactable for the REA with various subsequent calls and emails being sent to the renter.
On 22 April 2021, the renter made an offer to the REA to pay $50 a week towards the rental arrears and continue to pay $450 per week in future rental payments (essentially asking for a rent reduction of $60.00 per week).
On 23 April 2021, the REA replied informing the renter of the rejection of the proposal and gave the advice to vacate the property and seek a property with less rent in order to afford the repayments.
On 26 April 2021, the RRPs applied to VCAT under section 91ZM seeking vacant possession.
Findings
VCAT Found:
The RRP gave the renter at least 14 days’ notice to vacate when the renter owed at least 14 days’ rent.
This is the first occasion of non-payment of rent within a twelve-month period starting on the date the residential rental agreement commenced or the anniversary of that day.
The renter did not pay the unpaid rent on or before the termination date on the notice to vacate.
The rent is $2,216 per calendar month. As at 30 June 2021, the rent was paid up to 25 November 2020 with $1,936 on account. Unpaid rent was $13,872.45.
Having made an assessment under section 331 of the Residential Tenancies Act 1997 (Vic), VCAT is unable to find that satisfactory arrangements can be made to avoid financial loss to the RRP.
In the context of the above assessment, having regard to the criteria set out in section 330A of the RT Act, it is reasonable and proportionate to make a possession order.
VCAT Ordered and Directed:
The renter must vacate the rented premises by 3 September 2021.
At the request of the person who obtained the possession order and on payment of the prescribed fee the principal registrar of VCAT must issue a warrant of possession to be executed within 14 days after the date of issue.
VCAT Neglected to Order:
VCAT did not order the rent to be repaid. The Tribunal cited that until 25 October 2021 renters have a defence to compensation claims if they have not paid rent due to a COVID-19 reason pursuant to Regulation 14 of the Transitional Regulations Act.
Impact on Landlords
This decision distinguishes Parliament’s intention for the operation of Regulation 14 of the Transitional Regulations Act. The Tribunal was clear in stating that Regulation 14, which extended the operation of section 542 of the RT Act does not apply to the eviction of tenants through a possession order.
The Tribunal accepted that the REA and RRP followed all normal procedure to ensure the NTV was issued correctly. Justice Quigley further stated that Regulation 14 and 542 do not operate with respect to possession order applications and section 91ZM, such that unpaid rent does not accrue. As such, following the path of reasoning described above (91ZM to sections 330, 330A and 331), Justice Quigley found that a possession order is to be granted in this case.
The Tribunal asserted that Regulation 14 was intended by Parliament to operate in relation to the renter not being able to pay their rent due to the impacts of the COVID-19 pandemic.
It is yet to be seen what the final outcome will be in relation to the payment of the outstanding rental arrears in this specific case. As stated earlier, the Tribunal elected to not make an order as to the money owed to the RRPs. It is extremely likely that come 25 October 2021, the RRPs in this instance will re-file an application for an order to pay these costs. However, this remains to be seen.
We note this article is shortened for readability purposes, if you have further interest or would like the full article, please contact our Brayden McGregor at bmcgregor@slflawyers.com.au.
