The practical effect of the rules on evicting tenants during COVID-19: RFY v ACV (Residential Tenancies)

By Alicia Hill, Principal and Matthew Deetlefs, Law Clerk

The case of RFY v ACV (Residential Tenancies) [2021] VCAT 865 concerned an application by a landlord to evict a tenant on the basis of unpaid rent after Regulation 14 of the COVID-19 Omnibus (Emergency Measures) Transitional Regulations 2021 came into effect.

The tenant suffered significantly reduced income due to COVID-19, however, VCAT found that the tenant could be evicted even though the tenant had COVID-19 reasons for failure to pay rent. Despite this eviction order, the tenant could still rely on COVID-19 reasons to defend a claim by the landlord for payment of rental arrears.

Background:

A tenant and landlord entered into a rental agreement in 2015. The tenant had been working as a rideshare driver. During COVID-19, the tenant’s income was significantly reduced, and the tenant was only eligible for JobSeeker. The tenant contacted the landlord seeking an agreement to pay half rent but the landlord did not reply. Between May and December 2020, the tenant paid half rent to the landlord. The tenant had not failed to pay rent prior to COVID-19.

On 26 April 2021, the landlord applied to VCAT under section 91ZM of the Residential Tenancies Act 1997 for a possession order to evict the tenant on the basis of 14 days’ unpaid rent.

The tenant sought to rely on Regulation 14 of the COVID-19 Omnibus (Emergency Measures) Transitional Regulations 2021, arguing that, through Regulation 14, the repealed section 542 of the Residential Tenancies Act 1997 applied, therefore the tenant had not breached the rental agreement and owed less than 14 days’ rent when notice to vacate (Notice) was provided.

Section 542 provides that a person is not taken to have breached a term of their lease or the Residential Tenancies Act 1997 if it was not reasonably practicable for them to comply because of a COVID-19 reason. Accordingly, if the section applied, the tenant could not be evicted. The COVID-19 reasons set out in section 537 capture where someone is:

• Ill;
• Unable to pay rent because of the restrictions;
• Unable to pay rent without suffering severe hardship; or
• Unable to comply with their rental agreement as a result of exceptional circumstances in relation to COVID-19.

The tenant argued that

• Under Regulation 14, they should not be taken to have breached their rental agreement and therefore owed less than 14 days’ rent when the Notice was provided. As such, the Notice was invalid and the landlord’s application for possession must be dismissed.
• Alternatively, the landlord was prevented from seeking possession as they led the tenant to assume that a rent reduction had been agreed and the tenant would have had the opportunity to address the rent issues if the tenant had not assumed this.
• Alternatively, if the Notice was valid, under Regulation 14, the rent arrears were $227.14 and it was not reasonable and proportionate to make a possession order.
• Alternatively, the tenant and landlord had agreed to halve rent and it was not reasonable and proportionate to make a possession order.
• Alternatively, even if the rent arrears were $13,872, it would not be reasonable and proportionate to make a possession order.

Conclusion:

The Court rejected the argument that Regulation 14 or section 542 meant that the tenant did not owe at least 14 days’ rent in relation to the giving of the Notice. Regulation 14 and section 542 do not operate with respect to possession order applications. The tenant could therefore be evicted despite having a COVID-19 reason for failing to pay rent.

The landlord’s failure to respond to the request that the tenant pay half rent did not mean that the landlord accepted the request. The landlord was therefore not prevented from seeking possession.

The amount of rental arrears owed was not trivial and amounted to $13,872. It was therefore reasonable and proportionate to make a possession order. The rental arrears could not however be sought by the landlord as Regulation 14 prevents rental arrears being sought where there is a COVID-19 reason until 25 October 2021.

Take-aways:

Landlords should be aware that they may begin evicting tenants for rental arrears that were accrued due to COVID-19. Tenants may however still defend applications for compensation if the rental arrears were accrued due to a COVID-19 reason up until 25 October 2021.

Although tenants may not be aware of the extent of growing rent arrears, this does not mean that the tenant will not be evicted.

With ongoing changes to the protections provided to tenants, it is more important than ever that legal advice is sought before acting or to defend unmeritorious eviction attempts.

If you have any queries about any of the matters raised by this case, then please contact Alicia Hill on (03) 8540 0292 or alicia.hill@mst.com.au