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The reasonable & proportionate test

Last updated: 29 Mar 2021

 

The Residential Tenancies Amendment Act 2018 (Vic) (RTAA) introduced a reasonable and proportionate test into the Residential Tenancies Act 1997 (Vic) (RTA). This page details:

  • What orders the reasonable and proportionate test applies to
  • What is the reasonable and proportionate test
  • How the test has been interpreted
  • How the test will be interpreted
  • Preparing for the reasonable and proportionate test

Relevant orders

The Tribunal will have regard to whether an order is “reasonable or proportionate” in determining whether to:

  1. make a possession order under s 330(1)(f);
  2. dismiss a possession order and make a compliance order under s 332A(1)(a); or
  3. make an order terminating the residential rental agreement, residency right or site agreement under s 376(1A) following a notice to leave hearing.

What is reasonable and proportionate?

Under s 330(3)(f) RTA, the Tribunal can only make a possession order in relation to a residential rental, rooming house, caravan or Part 4A site agreement if the Tribunal is satisfied that it is reasonable and proportionate to do so having regard to the interests of:

  • the residential rental provider, rooming house operator, caravan park owner, site owner or mortgagee as the case requires;
  • the renter, resident or site tenant;
  • any co-tenants or co-site tenants or other residents;
  • any neighbours or any other person who may be, or who has been affected, by the facts or behaviour of the renter, resident or site tenant to whom the notice to vacate was given.

To determine whether it is reasonable and proportionate to make a possession order, the Tribunal must consider the criteria under section 330A RTA. These are:

  1. the nature, frequency and duration of the conduct of the renter which led to the notice to vacate being given, including whether the conduct is a recurring breach of obligations;
  2. whether the breach is trivial;
  3. whether the breach was caused by the conduct of any person other than the renter;
  4. whether the renter has made an application for an intervention order and whether it was in force, contained an exclusion condition or other matters the Tribunal considers relevant;
  5. whether the breach has been remedied as far as is practicable;
  6. whether the renter has or will soon have capacity to remedy the breach and comply with their obligations under their rental agreement;
  7. the effect of the conduct of the renter on others;
  8. whether any other order or course of action is reasonable available instead of making a possession order;
  9. as the case requires, the behaviour of the residential rental provider or the provider’s agent etc; and
  10. any other matter the Tribunal considers relevant.

The Tribunal has held that criteria (a) to (g) are irrelevant where the ground for seeking the order is not based on any action or conduct of the tenant. On this, see Rizio v XEP [2020] VCAT 882 at [24] which concerned an application for the landlords to move into the property.

How has the test been interpreted?

The decision as to whether the reasonable and proportionate test is satisfied has been framed by reference to whether on balance the impact of making the order on the renters is “harsher” or “more severe” than the impact on the residential rental provider of not making the order, or whether the hardship to the renter outweighs the hardship to the residential renter provider. See Mikho v Burgess [2020] VCAT 691 at [14]; Rizio v XEP [2020] VCAT 882 at [32]; Struth v Thwaites [2020] VCAT 788 at [37].

It has been held that when taking into account the interests of the relevant parties it is necessary to consider their case at its highest at the time of the hearing: LKZ v BSL [2020] VCAT 909 [25] and [27].

The impact of a possession order on the renter is a ‘fundamental aspect’ of the analysis required by the Tribunal under the reasonable and proportionate test. The Tribunal should give active intellectual consideration to the impact of the order on the renter, as opposed to a ‘cursory, dismissive or passing reference’: Hanson v Director of Housing [2022] VSC 710  at [44] to [45].     

The Supreme Court in Hanson discussed the standard of consideration that was relevant. The question of impact under s330(1)(f) was said to concern a ‘forward-looking, hypothetical matter’. The Court found that the Tribunal needed to consider not whether renter would be rendered homeless by the making of a possession order, but whether it was likely that he would be rendered homeless (at [70]).

Factual considerations which have influenced the Tribunal’s decision on the reasonable and proportionate test have included:

How will the test be interpreted?

Some early cases on the reasonable and proportionate test were decided under the COVID-19 tenancy regime provided for in the COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic) and the Residential Tenancies (COVID-19 Emergency Measures) Regulations 2020 (Vic). This regime included s 538, which is equivalent to the current s 330A. It is important to consider that cases from that time were decided at the height of the pandemic and in the context of significant COVID-19 related restrictions, and this likely impacted the Tribunal’s interpretation. Nonetheless, the case law on s 538 provides guidance as to how the Tribunal will interpret the reasonable and proportionate test in s 330A.

The case law on the reasonable and proportionate test under s 330A continues to develop. VCAT decisions have demonstrated that the outcome will likely turn on the facts and circumstances of the case, which also illustrates the types of arguments that can be made.

Lynch v Manion (Residential Tenancies) [2021] VCAT 1156

  • In this case, the residential rental provider made enquiries about selling the property in December 2020. In April 2021, the renter informed the rental provider of repairs required. The rental provider issued a notice to vacate on the basis of sale of the property (s 91ZZB) on 9 May 2021, attaching a contract of sale. Subsequently, the renter made an application to VCAT, seeking repairs. The rental provider applied for a possession order on 1 July 2020.The renter opposed the possession order application, on the basis she had lived there for 6 years, was a pensioner unable to pay for removalist, had physical and mental health issues making her physically incapable of moving.
  • The rental provider had no impending financial need to sell property but wanted to sell to fund future endeavours for their family. The agent advised that the property would sell for more if vacant, and if first tidied up and minor renovations done. The rental provider argued there were numerous properties available nearby in better condition and cheaper that renter could move into, including a nearby unit in the same building. The Tribunal held that it was reasonable and proportionate to make a possession order, as:
    • although the renter’s physical injuries restricted her ability to move out, they were not completely prohibitive;
    • the renter had few possessions which required relocation, so the move would not be difficult;
    • the Tribunal rejected the renter’s argument that she would be made homeless if evicted, as there were several available properties nearby, cheaper and with the same amenities;
    • while the rental provider had no immediate need to sell the premises, she had waited 5 months since first putting the renter on notice that she wanted to sell;
    • the rental provider was entitled to realise her asset;
    • it was deemed reasonable for the rental provider to take advantage of the current market to get the best price possible by selling it vacant.
  • The Tribunal ordered the issuing of the warrant of possession be delayed under s 353 by 30 days, as whilst the rental provider had no immediate need to sell, the renter’s hardship outweighed the rental provider’s such that delay was appropriate.

Danrell v Morris (Residential Tenancies) [2022] VCAT 1303 (21 October 2022)

  • In this case, the RRPs wanted to sell their investment property with vacant possession.
  • With interest rates rising, the RRPs could not afford to service their mortgage and needed to sell the property. They had not attempted to sell the premises with the renters in possession. On advice from their agent, they considered that selling the property vacant would allow them to achieve the best price.
  • The renters were a family of five, including two children with special needs.
  • A notice to vacate on the basis of sale of the property (s 91ZZB) was issued to the renters on 22 February 2022. The validity of the NTV was not disputed.
  • Nonetheless, the Tribunal found that it was not reasonable and proportionate to make a Possession Order, having regard to the competing interests of the parties.
  • The Tribunal considered the following in making this determination:
    • The renters had made considerable efforts to find suitable alternative accommodation, applying for close to 90 rental properties without success.
    • The renters were connected to the local community including through employment, schooling and services, which meant that moving out of the area was not an option.
    • The Tribunal considered anecdotal evidence about the housing crisis facing Victorians and all of Australia, including the impact of recent flooding events.
    • Selling the premises with the renters in possession was a course of action that was reasonably available to the RRPs and should be explored.

Lodden Mallee Housing Services Ltd v OBG [2021] VCAT 1388

  • In this case, the rental provider sought possession on the basis of violent and intimidating conduct by the renter (s 91ZJ). The rental provider operated apartments which they would rent out to vulnerable people at risk of homelessness.
  • The Tribunal accepted the rental provider’s reasons for giving the NTV in that the renter had endangered the safety of neighbours, committing several verbal and physical attacks (resulting in criminal charges and IVO).
  • The Tribunal found that, ‘The danger constituted by the renter’s ‘violent and intimidating conduct did constitute an-ongoing danger to the physical and mental health and well-being.’
  • The Tribunal held that it was not reasonable and proportionate to make a possession order, as:
    • the renter was receiving treatment for a psychiatric condition which was the underlying cause of their dangerous actions, showed signs of improving and was expected to improve further; and
    • if the renter was rendered homeless, their treatment would be destabilised.
  • The Tribunal ordered that the renter not engage in conduct endangering the safety of neighbours, comply with the treatment plan for their psychiatric condition and not approach specific neighbours.
  • The Tribunal ordered the application for possession be adjourned to a later date (with the RRP able to renew the application if the renter failed to comply).

In addressing the Tribunal on whether eviction is reasonable and proportionate, it may be relevant to raise the Charter of Human Rights and Responsibilities Act 2006 (Vic) (the Charter).

Pursuant to s 32 of the Charter, so far as it is possible to do so consistently with their purpose, statutory provisions must be interpreted in a way that is compatible with human rights. It may be arguable that specific human rights lend weight to an argument that eviction would not be reasonable and proportionate.

Charter rights that may be relevant include:

  • the right not to have one’s privacy, family or home unlawfully or arbitrarily interfered with (s 13);
  • the protection of families (s 17(1));
  • the right for children to have such protection as is in their best interests and is necessary by reason of them being a child (s 17(2)); and
  • cultural rights (s 19).

In making submissions in relation to the application of s 32 of the Charter to the reasonable and proportionate test, you should be aware of the decision of Momcilovic v The Queen [2011] HCA 34 (8 September 2011) noting that s 32 does not permit a court to strain the language of a provision.

The way in which the reasonable and proportionate test will be interpreted will likely only be fully known as the body of case law on each of the criteria in the reasonable and proportionate test continues to develop.

Preparing for the reasonable and proportionate test

In preparing to defend a possession order application at VCAT, it will be important to consider the reasonable and proportionate test and how it applies to your client’s individual circumstances. You should consider each of the factors that the Tribunal must consider pursuant to s 330, and what instructions or evidence you need to gather.

At a minimum, this should include:

  • obtaining instructions from your client on
    • the impact of eviction on them and/or their dependents
    • any attempts made to secure alternative housing, including any barriers they have experienced
    • connections to the local area, such as employment, schooling or services.
  • obtaining evidence from support workers about the impact of homelessness on someone’s mental and physical health
  • obtaining supporting evidence on someone’s vulnerabilities (e.g. mental health, physical health or other issues)

If they are made available at the hearing, you should also prepare to cross examine the RRP about their circumstances, and consider making submissions about that the relative impact of a possession order on the parties.

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