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VCAT Rules: Tenants Don’t Need to Pay Disputed Rent to Stop Wrongful Evictions

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By Evelyn Marcou, Principal MST Lawyers

In a recent VCAT decision, it was confirmed that tenants who want to stop their landlords from wrongfully taking back their rental property don’t have to pay disputed rent into a trust account. This means tenants can seek legal protection without this extra financial burden, following the Tribunal’s usual practice.

The Full Case

In the VCAT case of Blue Train Café Pty Ltd v The Trust Company Limited (Building and Property) [2024] VCAT 75, the Tribunal rejected a landlord’s argument that a tenant should have to pay all disputed arrears into a solicitor’s trust account to secure an injunction.

At the VCAT hearing, the landlord asked for the full amount of disputed payments to be paid into a solicitor’s trust account. This request was refused. Instead, the Tribunal granted the injunction on the condition that the tenant continues to pay rent and other costs until the injunction trial, without requiring the disputed arrears to be paid into a solicitor’s trust account.

VCAT typically does not order the payment of disputed arrears into court or a solicitor’s trust account. However, the landlord argued that the injunction should be conditional on the tenant paying the disputed rent and outgoings into the trust account of the landlord’s solicitor.

The landlord appealed the decision to the Supreme Court, arguing that the principle “they who seek equity must do equity” requires a tenant seeking an injunction to pay disputed arrears into a trust account. The landlord cited the Federal Court decision in Telstra Corporation Ltd v First Netcom Pty Ltd [1997] FCA 860, which involved a commercial contract, not a leasing case.

In rejecting the landlord’s appeal, Justice Croft stated:

[40] An interlocutory order for an injunction, such as the one granted by the Tribunal, is a matter of practice and procedure. This Court must exercise “particular caution” when reviewing such a decision. Absent a vitiating error in law, the role of a specialist tribunal, such as VCAT, is not to be usurped by the Court. The Tribunal was required to make an interim decision on a complex matter affecting proprietary interests of the parties. It considered all relevant matters and, when granting the interlocutory injunction, exercised its discretion in a manner consistent with the Maxim, and thus, the principle in Telstra.

The Outcome

The Supreme Court’s decision upholds the longstanding position that a tenant should be able to obtain an injunction to prevent wrongful re-entry over disputed arrears without having to pay those arrears into a solicitor’s trust account. This decision confirms that VCAT will continue with its usual practice, providing clarity and consistency for tenants and landlords alike.

Key Takeaways

  1. No Trust Account Requirement for Injunctions: Tenants who seek to stop their landlords from wrongfully taking back their rental property are not required to pay disputed rent into a trust account. This reduces the financial burden on tenants seeking legal protection.
  2. VCAT’s Consistent Practice: VCAT does not usually order tenants to pay disputed arrears into a court or solicitor’s trust account to secure an injunction. This decision reaffirms VCAT’s standard practice and provides clarity for both tenants and landlords.
  3. Supreme Court Support: The Supreme Court upheld VCAT’s decision, confirming that tenants can obtain an injunction without paying disputed arrears into a trust account. This decision ensures that tenants have reliable legal protection without extra financial stress.

For more information or legal advice, please contact Evelyn Marcou from MST Lawyers