-->

Compensation

Last updated: 29 Mar 2021

What is the correct section of the RTA?

Note: For compensation issues in the context of family violence, see also Family Violence Provisions.

For renters, the main sections of the Residential Tenancies Act 1997 (Vic) (RTA) relating to compensation are ss 209, 209AA, 209AAB and 210. The differences between these sections depend on the following:

  • if the residential rental agreement is ongoing or has ended;
  • if the compensation issue relates to a breach of a duty provision;
  • if the residential rental agreement is for a fixed term of more than five years; and
  • if the compensation relates to a specific issue such as urgent repairs or discrimination.

This table shows the various situations in which the different sections of the RTA apply:

Tenancy status Compensation issue RTA section
Ongoing Breach of duty provision* Section 209
Ongoing Breach of residential rental agreement of greater than 5 years Section 209AA
Ongoing Renter has arranged for urgent repairs Section 209AAB(1)
Ongoing Loss or damage caused by discrimination Section 210AA(1)(a)
Ended (unless there is no breach of duty provision involved)* Breach of residential rental agreement

Breach of RTA (other than duty provisions)*

Section 210

 

*See Compliance Procedures for an explanation of what constitutes a duty provision

Practice tip

There is no automatic right to representation at the Tribunal in the applications outlined on this page. Accordingly, leave will be required under s 62(1)(c) Victorian Civil and Administrative Tribunal Act 1998 (Vic) for the applicant to be represented if the other party does not consent or is not represented by a professional advocate. See further Where do I go? What do I say?.

Rooming house and caravan park residents and Part 4A site tenants also have specific rights of compensation under ss 209AAB(2)-(4), s 210AA(1)(b)-(c), 210A and 210B.

Compensation for breach of duty provision

In most cases where the tenancy is still on foot, the renter or residential rental provider will be claiming compensation for a failure of the residential rental provider to comply with duty provisions under the RTA.

The residential rental provider owes the renter specific duties including:

  • Residential rental providers must ensure that when the renter enters into occupation, the premises are vacant and in a reasonably clean condition (s 65);
  • Residential rental providers must ensure the premises comply with the rental minimum standards on or before the day on which the renter enters into occupation of the premises (s 65A) ;
  • Residential rental providers must ensure the renter has quiet enjoyment of the premises (s 67);
  • Residential rental providers must maintain the premises in good repair and in a reasonably fit and suitable condition for occupation (s 68); and
  • Residential rental provider must undertake safety-related repairs and maintenance activities set out in the residential rental agreement (s 68A).

The renter also owes the residential rental provider duties that can be the subject of a compensation application. Some of the main duty provisions applicable to renters are:

  1. Renters must not cause nuisance or interference (s 60);
  2. Renters and visitors must not damage premises or common areas (s 61);
  3. Renters must keep and leave rented premises reasonably clean (s 63);
  4. Renters must not make certain modifications to rented premises without residential rental provider’s consent (s 64) ;

For a complete list of duty provisions see Compliance Procedures.

Where a duty provision is breached, a renter (or residential rental provider, as the case may be) may give a breach of duty notice (breach notice) under s 208 requiring the other party to comply with the duty and/or pay compensation. Where the breach notice requests compliance with the duty instead of, or in addition to, compensation see Compliance Procedures.

Practice tip

If the residential rental agreement is ongoing, a renter must issue a breach notice in order to claim compensation as a result of the failure of the residential rental provider to comply with a duty under the RTA. Despite this, the Tribunal has been known to order compensation in addition to non-urgent repairs orders without a breach notice in some circumstances.

A breach notice is an essential component of compliance procedures and for most compensation applications. A breach notice must:

  • be in writing;
  • be addressed to the person allegedly in breach of duty or their agent;
  • be signed by the person to whom the duty is owed or their agent;
  • specify the breach;
  • give details of the loss or damage caused by the breach;
  • state that a breach must not reoccur; and
  • provide details of the remedy/compensation required.

The breach notice must also specify what may occur if the notice is not complied with (i.e. application for a compliance order or a notice to vacate).

If the breach duty is not complied with, the person who have it can then apply for a compensation order under s 209. The breach notice should be included in the application.

Establishing claim at the Tribunal – has the renter incurred loss as a result of the breach of duty?

The renter must prove on the balance of probabilities that there has been a breach of duty and that they have suffered loss as a result of this breach of duty. See below ‘What evidence is required for a compensation application?’

Breach of tenancy agreement for long-term renters

Special compensation rules apply for parties to fixed term residential rental agreements with a term of more than five years. Under s 209AA, a party to such an agreement can apply to the Tribunal for compensation if the other party has breached a term of the agreement.

This avenue for compensation only applies if the term that was breached is from the prescribed standard form tenancy agreement under s 26. It does not apply if the term breached was one otherwise added by the parties under s 27A (see s 209AA(2)).

Compensation for urgent repairs

Section 209AAB(1) allows for a renter to apply to a Tribunal for a compensation or compliance order if:

  • the renter has arranged for urgent repairs in accordance with s 72(1);
  • the renter has given written notice of the urgent repairs and their cost to the residential rental provider; and
  • the residential rental provider has not reimbursed the renter within 7 days after receiving written notice.

The Tribunal can make an order for compensation under s 212(1B) if satisfied of the above.

Rooming house and caravan park residents and Part 4A site tenants have an equivalent right under s 209AAB(2)-(4).

Compensation for discrimination

Under s 210AA(1)(a), a renter can apply to the Tribunal for compensation for loss or damage suffered because the residential rental provider or their agent contravened:

  • section 30A: a residential rental provider cannot refuse to let residential premises on the basis of a protected attribute under s 6 Equal Opportunity Act 2010 (Vic) (EOA);
  • section 64(1B)(c): a residential rental provider must not unreasonably refuse consent to modifications to the rental premises that are reasonable alterations within the meaning of s 55 EOA and that have been assessed as required modifications by an occupational therapist or other registered health practitioner; or
  • section 81: a residential rental provider must not unreasonably withhold consent to the assignment or sub-letting of rented premises. The withholding of consent is deemed to be unreasonable if it is on the basis of an attribute in s 6 EOA.

Rooming house and caravan park residents and Part 4A site tenants have equivalent rights under s 210AA(1)(b)-(c). Note however there is no equivalent right to apply for compensation on the basis of unreasonably withholding consent to assignment or sub-lets for rooming house and caravan park residents.

A renter, resident or site renter must not apply under the provision if they have already brought a dispute under Part 8 of the EOA (s 210AA(2)).

Oher breach of RTA or residential rental agreement

If a tenancy has ended, or the residential rental provider has breached a part of the RTA that is not a duty provision, then the renter may apply for compensation under s 210.

Practice tip 

If the residential rental agreement has ended, it is beneficial if the renter issued a breach notice during the term of the in order to claim compensation as a result of the failure of the residential rental provider to comply with a duty under the RTA. If a renter has not issued a breach notice, they can still rely on other documentary evidence (such as a letter, email/maintenance request form) in which the residential rental provider was advised of the compensation issue. While the renter may also provide oral evidence that they advised the residential rental provider of the compensation issue, this will be less persuasive and we recommend that renters, where appropriate, issue breach notices or correspond in writing.

Is a Notice of Breach required for compensation even where the renter has moved out and is claiming under s 210?

Example: Cassandra moved out of her Director of Housing premises as a result of an infestation of cockroaches and serious plumbing problems. Prior to moving out of the premises Cassandra had repeatedly called the service centre and complained about the insects in her flat and the plumbing issues. She did not issue a breach notice because she assumed her calls to the service centre were sufficient. As the residential rental agreement had ended she made a claim under s 210 of the RTA for compensation from the residential rental provider.

Answer: In this case Cassandra made a claim under the correct section of the RTA but may have difficulties with her claim because she had not issued a breach notice. Section 210 of the RTA does not explicitly require a breach notice but practically the Tribunal will generally require proof a residential rental provider was aware of a repair issue. The renter is a stronger position if they can produce documentary evidence demonstrating that the residential rental provider had been told about the repair issue. For example, Cassandra may have written a letter or email. Alternatively, it may be a good idea to issue a Freedom of Information (FOI) request of the residential rental provider to see whether there are any notes on file if the residential rental provider is covered by the FOI regime (see Obtaining information from the Director of Housing for more information)

Establishing a compensation claim brought by a renter

What evidence is required for a compensation application?

There are three main types of evidence required in compensation applications:

  1. Evidence of loss to the renter arising from the compensation issue.

Where renters are claiming compensation they will need to prove their loss (i.e. quotes, invoices) to the Tribunal. Where renters are unable to prove their loss, they may attempt to argue that the actions of the residential rental provider caused a ‘reduction of amenity’ (which may be calculated as a percentage of the rent). It will be helpful to show calculations of lost amenity – for example, show the number of days from notification (of the repair issue) until the date of repair multiplied by a percentage of the daily rent. It is possible to claim both reduction of amenity and financial loss.

  1. Evidence of the compensation issue (such as repairs or breach of quiet enjoyment).

This evidence might be provided by photographs, film, witnesses or evidence of the renter.

  1. Evidence that the other party was put on notice (ie a breach notice, or less ideally an email or letter)

What loss can the renter claim?

As a general rule, the Tribunal will only award compensation for direct loss or damage and not for pain and suffering or physical injury (s 447(2)).

In addition to claiming direct financial loss/damage it is generally worthwhile advising clients to think about claiming compensation for the ‘loss of amenity’ of their premises. This is particularly important for renters who may face difficulty proving their loss because while they can be significantly inconvenienced and disadvantaged by the actions of the residential rental provider (for example, living without electricity or running water) – they cannot point to any direct financial outlay as a result of these actions.

Example

If a renter had no running water for 1 month but was unable to afford alternative accommodation, it may be worth attempting to claim a 75% reduction in rent for that period. This figure takes into consideration that despite the significant inconvenience to the renter, the renter still had the benefit of living in the premises during that period.

See also Reardon v Ministry of Housing (unreported, Supreme Court of Victoria, 13 November 1992, Smith J).

See also EL v EA (Residential Tenancies [2006] VCAT 2049 (11 October 2006)).

What will the Tribunal consider when hearing a compensation application?

Matters to be taken into consideration by the Tribunal in considering compensation claims brought by renters are set out in ss 211 and 211A. They include whether:

  • the residential rental provider has taken all reasonable steps to comply with the duties under the RTA or the residential rental agreement;
  • the renter has already been paid or offered compensation; and
  • there has been any reduction of rent or other allowance.

The Tribunal must also consider any depreciation of the damaged part of the property by having regard to the Uniform Capital Allowance System (s 211A(2)) and the guidelines issued by the Director of Consumer Affairs Victoria (s 211B).

Practice tip

Considerations in compensation matters

When assisting clients to claim compensation or respond to such applications from the residential rental provider there are a number of issues that must be kept in mind.

  1. Relevant sections of the RTA
  2. Has written notification been given to the residential rental provider of the compensation issue?
  3. Has there been direct loss or damage as a result of the compensation issue?
  4. Is there (sufficient) evidence or proof of (a) the compensation issue and (b) the loss of damage arising from that issue?

Are there limits on the amount of compensation?

Section 447 of the RTA specifies a $40,000 limit on compensation claims to be heard by the Tribunal (or $100,000 for Part 4A site tenancy agreement claims). In order to increase this jurisdictional limit, the renter has a number of options that include:

  1. Abandoning the amount of the claim which exceeds $40,000;
  1. Reaching agreement with the other party to increase the jurisdictional limit; or
  2. Making an application under the Australian Consumer Law (Vic) (ACL) (via the Australian Consumer Law and Fair Trading Act 2012 (Vic) (ACLFTA) if an applicable cause of action exists.

ACL claims: If your client wishes to make a compensation claim under the ACL which exceeds $40,000, the compensation application should specifically refer to the ACL. ACL claims may be heard by the Civil Claims list not the Residential Tenancies List. It is important to think about which list will hear the application because there are significant differences in application fees between the Civil Claims and Residential Tenancies Lists.

Compensation claims by residential rental providers

Residential rental providers may also claim compensation from renters for breach of a duty provision. For a list of duties see Part 1 above or Compliance Procedures.

How can the renter defend a claim for compensation?

Where a renter is the respondent to an application for compensation, the renter may need to:

  1. resist the basis for the claim on the grounds that they did not breach a duty under the RTA or an obligation under the residential rental agreement (ie. denying responsibility for damage or breach of duty);
  2. reduce the quantum (dispute the quotes/invoices/evidence of the residential rental provider on the basis they are inflated, repetitious, fail to consider fair wear and tear); and/or
  3. resist any claim that goes beyond the actual loss, for example the cost of painting a whole room for a mark on one wall.

If the renter disputes the claim, it is necessary to understand the evidence on which the residential rental provider makes its claim. It is equally necessary to understand the evidence upon which the renter resists the compensation claim.

 

Practice tip

Even if the renter admits that they caused the damage, it is important to ensure that the renter is only required to pay the amount or quantum of the compensation claim that reflects what they admit and what is reasonable.

What evidence does the residential rental provider require?

In assisting a renter to defend an application for compensation, you should obtain all documentation including:

  1. Tribunal documents including the application where the residential rental provider is claiming compensation for breach of a duty under the RTA;
  2. evidence from the residential rental provider of the compensation issue (ie photographs of the alleged damage); and/or
  3. evidence of the loss of damage to the residential rental provider (ie receipts/invoices etc).

Unfortunately, renters do not always have the evidence relied upon by the residential rental provider, and the Tribunal can occasionally allow applications without this material. If there are difficulties accessing or obtaining this evidence, it may be beneficial to make arguments based on the Tribunal’s fair hearing obligations (see Fairness) or the s 24 Charter right to a fair hearing.

What will the Tribunal consider when hearing a compensation application?

Matters that may be taken into consideration by the Tribunal in considering compensation claims brought by residential rental providers are set out in s 211. They include whether:

  • the renter has taken all reasonable steps to comply with the duties under the RTA or the residential rental agreement;
  • the residential rental provider has consented to the failure to comply with the duties in respect of which the claim is made;
  • the residential rental provider has already been paid or offered compensation; and
  • there has been any reduction of rent or other allowance;
  • there has been any action taken to mitigate the loss or damage;
  • if the claim is with respect to damage to property, any action taken by the renter to repair the damage at their own expense.

The Tribunal also must consider under s 211A or s 211B:

  • any depreciation of the damaged part of the property by having regard to the Uniform Capital Allowance System;
  • if the compensation is payable for early termination by a renter:
    • the Tribunal’s determination for advertising costs and reletting fees on a basis that is proportionate to the actual cost of securing a renter;
    • what loss could reasonably have been mitigated by the residential rental provider promptly reletting the rented premises;
    • any severe hardship the renter would have suffered if the residential rental agreement had continued;
  • whether a renter who was required to give written notice under s 72AA (regarding damage) has given that notice
  • any guidelines issued by the Director of Consumer Affairs.

There are additional limitations on the Tribunal’s ability to order compensation in ss 211A(3)(d) and 211A(4).

The Tribunal also must consider the guidelines issued by the Director of Consumer Affairs Victoria (s 211B).

What can a renter do if the Tribunal has already made a compensation order?

If the Tribunal has already made a compensation order there is generally very little that can be done to assist the renter. The main issue is whether the renter attended the hearing at which the compensation order was made. If the renter did not attend the hearing, they may be able to apply for a review hearing.

Compensation – Practice issues

Getting instructions?

What to ask a renter who wants compensation

In assisting a renter to prepare a compensation claim you should think about asking the following questions:

  1. Is the residential rental agreement ongoing/ended?
  2. What is the compensation issue? (ie repairs, breach of quiet enjoyment)
  3. What is your loss? How can your loss be proved?
  4. Did you tell the residential rental provider? When? How can this be proved?

What to ask when a renter wants to defend compensation proceedings

In assisting a renter to defend an application for compensation, you should obtain all documentation and consider all the heads of loss or damage claimed by the residential rental provider and consider whether these claims inflated or unreasonable. Further, you should consider asking the renter the following questions:

  1. Is the residential rental agreement ongoing/ended?
  2. Has the residential rental provider issued compensation proceedings? Does the renter have the Tribunal documentation (i.e. breach notice, application to the Tribunal)?
  3. What is the alleged breach of duty or the residential rental agreement?
  4. Did loss arise from the alleged breach?
  5. What is the renter’s response to these allegations? That is, did they breach the duty or residential rental agreement?
  6. If the renter admits liability, is the amount claimed equivalent to the actual loss? Is it a fair or inflated price? If the latter, a renter may need to get alternative quotes to defend the claim.

What should you tell renters about compensation procedures?

In advising clients about compensation issues it is important to advise renters about:

  1. the realistic prospects of a compensation order being made;
  2. the possible size of a compensation order;
  3. what kinds of loss can be claimed for and limitations on amounts that can be claimed;
  4. any relevant limitation dates by which time they need to bring a claim (if relevant); and
  5. other possible outcomes of compensation proceedings (ie eviction).

In relation to (1) and (2), these issues depend on evidence. In addition to obtaining evidence about the compensation issue, your client may also require evidence which demonstrates that she advised the residential rental provider of this issue.

By obtaining instructions about the evidence for and against your client, you will be in a far better position to understand the strengths and weaknesses of your client’s claim/defence.

In many cases we assist clients who have difficulty in gathering evidence about their compensation claim. They may have difficulty in proving a compensation event existed or that they actually told the residential rental provider about this issue (if required). In these cases it is important to assist the renter to identify and pull the relevant evidence together. It is also important to advise the clients about the difficulties and challenges that confront their application so that they can make an informed decision about whether to bring a compensation claim.

What should you tell the renter? Three important pieces of advice

In addition to considering the legal and evidentiary issues, it is also very important to try and provide your client with practical advice about compensation procedures. Some of the issues you may wish to raise with your client include:

  1. If your client is seeking compensation from their residential rental provider and the residential rental agreement is continuing, will the residential rental provider seek to evict your client? (noting there are some protections for retaliatory behaviour – see Possession – when a residential rental provider ends the rental).
  2. If your client’s claim involves a large amount of compensation, is the client aware that the Tribunal is conservative in the amounts of compensation awarded and there are limits to the amount that can be awarded.
  3. Even though your client may have legitimate and serious concerns about the premises and/or breaches by the residential rental provider – compensation issues depend on evidence. If your client does not have documentary or other strong evidence about the claim, this will influence the size of the Tribunal’s award.

Practice tip

You can negotiate to resolve compensation claims outside of VCAT. In some instances, it may be possible to resolve compensation claims through negotiation. You should advise your client of the benefits and risks of trying to resolve a claim through negotiation.

This page contains legal information only. View our disclaimer.

Not a lawyer?

Homeless Law in Practice provides resources and tools for Victorian lawyers and advocates. If you’re looking for help, visit Justice Connect.