Housing and Tenancy

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Creation of a tenancy

If your client is residing in rented premises but is not a party to the lease and at risk of being evicted, they may be able to make an application to the Victorian Civil and Administrative Tribunal (VCAT) to have a new tenancy created in respect of that premises under section 232 of the Residential Tenancies Act 1997 (RTA)

An application under section 232 requires VCAT to balance the hardship that a applicant would likely suffer if compelled to leave their place of residence, compared to the hardship the landlord would suffer should they be forced to enter into a tenancy with the applicant.

Applications for the creation of a tenancy can be quite complicated and tend to be vigorously defended by landlords including the Director of Housing.

Who can apply for the creation of a tenancy?

A person can apply for the creation of tenancy if an application for a possession order for the premises has been made under Part 7 of the RTA (Section 232(1)(a)). A person may also make an application under this section if the tenant has abandoned the premises, has delivered up vacant possession of the rented premises to the landlord, has given a notice of intention to vacate the premises or has died and there is no surviving tenant.

An application can be made under this section either before or after a possession order is made in favour of a landlord against the applicant.

Note: Section 232 of the RTA sets out the pre-conditions which must exist before the applicant qualifies to make an application for the creation of a tenancy.  The use of 'or' between each paragraph of subsection 232(1) indicates that each pre-condition operates by itself, so that an applicant only needs to demonstrate one of the circumstances to be eligible to make an application under this section.

How are creation of tenancy matters decided by the Tribunal?

Applications for the creation of tenancy are dealt with on the ba sis of the 3 criteria set out in section 233 of the RTA. The 3 criteria are as follows:

  1. the applicant could reasonably be expected to comply with the duties of a tenant under a tenancy agreement to which this Act applies; and
  2. the applicant would be likely to suffer severe hardship if he or she were compelled to leave the premises; and
  3. the hardship suffered by the applicant would be greater than any hardship that the landlord would suffer if the order were made.

Compliance with the duties of a tenant

Section 233(1)(a) of the RTA requires that the applicant 'could reasonably be expected to comply with the duties of a tenant under a tenancy agreement'.  Broadly speaking, this will require the applicant to demonstrate to VCAT their ability to pay rent and comply with their tenancy duties as set out in the RTA. 

In relation to the issue of ability to pay rent, it is helpful if the tenant can provide evidence of her income and ability to meet financial obligations. If the applicant can show they had been paying rent toward the previous tenancy agreement this may also provide helpful evidence to satisfy section 233(1)(a). 

Instructions: If you are advising or representing a tenant in relation to an application for the creation of tenancy, you need to obtain instructions and evidence about this issue. Letters of support from previous landlords, community members and other people of standing in the community may be helpful. On the other hand, it is important to be prepared for adverse information to be raised against your client. You need therefore to ask about difficult tenancies or problems the tenant may have had with past landlords.

The applicant would be likely to suffer 'severe hardship'

To satisfy the requirements of section 233(1)(b) of the RTA, the applicant will need to demonstrate that they are 'likely to suffer severe hardship' if evicted.  VCAT will be required to consider the personal circumstances of the applicant and any adverse consequences the applicant would suffer if the order is not made. 

VCAT will analyse the facts presented by the applicant and then make a determination whether those facts amount to severe hardship.  It is a fact, degree and value judgment.  The use of the word 'severe' means that a high level of hardship needs to be established.

Example: In Cosic the applicant failed to demonstrate that she would suffer severe hardship because she was a single person with no children and in a better position to find alternative accommodation. 

There is no definition of 'hardship' in the RTA.  Generally, courts have taken a common sense approach, asking what a reasonable bystander with knowledge of all the facts would conclude.  'Hardship' has also been interpreted to comprehend any matter of 'appreciable detriment whether financial, personal, or otherwise'.

Hardship

Types of hardship may include:

  • physical or mental illness, which might limit your client from finding alternative accommodation, and which may be aggravated should your client be forced to move;
  • ability (or lack thereof) to find alternative accommodation,
  • the consequences of eviction (ie homelessness);
  • income, which may limit your client from obtaining a rental property at market rates;
  • number and status of any dependant children; and
  • requirement of your client to remain in the area where they currently reside
  • ties to the local area including medical / therapeutic / community / sporting involvement

What evidence?

The applicant need only establish that they would 'likely' suffer severe hardship.  This means the applicant must show that there would be 'a real and not remote' chance of suffering severe hardship.

It is important to identify evidence required to establish each aspect of hardship. If the client has a mental health issue that would be exacerbated by eviction - a medical report should be provided to the Tribunal. If the client has community / treatment / family relationships in the area, evidence of these relationships should be provided to the Tribunal.

Example: If your client makes the submission that they would be homeless if a tenancy is not create, your client will need evidence to support this. Clients should be assisted to make contact with housing agencies and to search classifieds in order to locate affordable alternative housing. If these attempts are unsuccessful it is possible to say with greater confidence that the tenant would be at risk of homelessness if evicted. Note - written records / clippings should be taken for use as evidence in proceedings.

The meaning of hardship as it relates to the Director of Housing

Section 233(1)(c) requires the applicant to show that the hardship they are likely to suffer would be greater than any hardship that the landlord would suffer if the order were made. 

It has been considered that the concept of 'hardship' under the RTA must take into account the fact that many landlords will be corporate entities, and 'hardship' must therefore be construed broadly to cover various types of hardship a corporate body may experience, and not just financial considerations.  The Director of Housing is a special type of landlord, and just like a corporate entity, the Director is unlikely to suffer 'hardship' in the same way as an individual. 

Cosic v Director of Housing is the leading authority on the application of section 233(1)(c) to the Director of Housing.  In Cosic, Justice Forrest found that the administration of the Director's housing waiting list, and any adverse effect upon it, can be a form of hardship a landlord may suffer under section 233(1)(c) of the RTA.  In that case it was found that the applicant did not suffer severe hardship, and therefore the hardship balancing exercise was not carried out.  However, Justice Forrest held that VCAT are entitled to take into account the position of the Director as opposed to other landlords, and one characteristic of the Director was the orderly management of the housing waiting list. 

Justice Forrest also found that at the stage of considering whether the applicant has satisfied section 233(1)(c), VCAT is not entitled to take into account the individual considerations of people on the waiting list, however, as discussed above, VCAT may make these considerations when exercising its residual discretion. 

If all 3 criteria are satisfied, must the Tribunal create a tenancy? (residual discretion)

Section 233 of the RTA sets out the elements that VCAT must be satisfied of before it has the discretion to order a tenancy be created between the applicant and landlord.  The three limbs of section 233(1) are cumulative, and the applicant must satisfy VCAT that all of subsections (a), (b) and (c) are met before VCAT can make an order under the section. 

Even if the applicant satisfies VCAT of the requirements of the three limbs, the section provides that VCAT 'may' make an order.  This gives VCAT a 'residual discretion' to refuse an applicant's request for the creation of a tenancy, even if all three limbs are made out.  The residual discretion gives VCAT grounds to take into consideration factors that they would not necessarily be able to consider under the three limbs of section 233(1). 

Can the Tribunal consider hardship to anyone?

In determining 'hardship' under sections 233(1)(b) and (c) of the RTA, VCAT can only consider individual hardship suffered by the applicant and the landlord, and not anyone else.  When considering the three limbs of section 233(1), VCAT is bound to look solely at the individual hardship.  VCAT can therefore not take into account hardship suffered by anyone other than the applicant, or any hardship that may be suffered on the Director of Housing's waiting list.

However, VCAT may consider hardship suffered by other people when exercising a 'residual discretion' which exists in the legislation. Hardship that may be taken into consideration under VCAT's residual discretion may include the hardship that would be suffered by people connected to the applicant, such as the applicant's children who may also be affected by the order.  The residual discretion may also permit VCAT to extend it's consideration to people connected to the landlord that would be affected.  Relevant to our clients, VCAT will be permitted to take into account potential hardship suffered by people on the Director of Housing's waiting list (see section 4.5 for a further discussion about the Director's waiting list and hardship).

Application of the Charter to section 233

VCAT is a public authority for the purposes of the Charter of Human Rights and Responsibilities Act 2007 (Vic) (the Charter) when acting in an administrative capacity.  It has been held that the exercise of a discretionary power to make orders creating new rights and imposing new liabilities will be an administrative function.  Section 233 of the RTA can be construed in this way. 

Section 38 of the Charter imposes obligations on public authorities to act in a way that is compatible with human rights in making its decisions.  VCAT must therefore make decisions under section 233 that are compatible with the applicant's human rights.

In the context of an application for creation of a tenancy under the RTA, the rights under the Charter that may be engaged include:

  • the right of a person not to have their privacy, family, home or correspondence unlawfully or arbitrarily interfered with (section 13);
  • the protection of families, which states that every child has the right to such protection as is in their best interests (section 17); and

In making a decision in accordance the Charter, VCAT must adopt the following procedure:

  1. section 233 must be interpreted in a way that is compatible with human rights. In doing so, VCAT must consider all possible interpretations of the provision, and adopt the interpretation that least limits the Charter rights;
  2. once section 233 has been interpreted, then if the provision limits any Charter rights a justification analysis must be undertaken;
  3. if section 233 cannot be justified, the Supreme Court may make a declaration of inconsistent operation.

VCAT will need to decide whether the limitation of the applicant's rights under the Charter resulting from refusing an application under section 232 of the RTA can be justified under section 7(2) of the Charter.  Broadly, if a Charter right is interfered with, section 7(2) will require VCAT to undertake a justification exercise, to determine if the interference is proportionate. 

VCAT is therefore required to act compatibly with the applicant's human rights and give proper consideration to human rights when exercising its discretion under section 233 of the RTA, and give adequate reasons for any limitation of those rights. 

You should consider which, if any, Charter rights will be engaged in relation to your client when making an application under section 233 of the RTA.  For example:

  • The right to privacy and home (section 13 of the Charter) will likely be engaged if your client can demonstrate that the premises the subject of their application is their home. 'Home' embraces a person's place of residence, and does not depend on whether the person has any proprietary or contractual right or licence to occupy the premises.
  • If the applicant has children, the right of children to protection (section 17 of the Charter) will be engaged. Submissions should be prepared for the applicant demonstrating the impact of an eviction on their children.
  • Cultural rights (section 19 of the Charter) may be engaged if your client can demonstrate the importance of remaining in the current premises, because of ties to a particular cultural, religious, racial or linguistic community which the client may lose if compelled to leave.

 


Ludlow v Director of Housing and anor (unreported, Supreme Court of Victoria, 4 June 1997, Chernov J) in relation to the equivalent provision under the Residential Tenancies Act 1980

Cosic at [56]-[57].

Cosic at [65].

Cosic at [34], [79].

Rukat v Rukat [1975] 1 All ER 343 at 351.

FG O'Brien Limited v Elliott [1965] NSWR 1473 at 1475.

Boughey v The Queen (1986) 161 CLR 10 at 21. 

Cosic at [43].

Cosic at [43].

Cosic at [46], [56]-[57]. 

Cosic at [49].

Cosic v Director of Housing [2007] VSC 486 (Cosic) at [28].

Interpretation of Legislation Act 1984, s 45; Cosic at [27].

Cosic at [39].

Cosic at [28].

Cosic at [39].

section 4(1)(j).

Kracke v Mental Health Review Board [2009] VCAT 646 at [290].

Charter, section 32.  It has been held that section 32 was not intended to create a special rule of statutory interpretation, but should be construed as a part of the body of rules governing the interpretive task:  The Queen v Momsilovic [2010] VSCA 50 at [101].

The Queen v Momsilovic [2010] VSCA 50 at [105].

UN Human Rights Committee, General Comment 16 on Article 17 of the ICCPR, at [5]; London Borough of Harrow v Qazi [2003] UKHL 43.