VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
Residential Tenancies Division
RESIDENTIAL TENANCIES LIST		VCAT REFERENCE NO. R2021/10298; R2021/10712

CATCHWORDS	
COVID-19 Omnibus (Emergency Measure) Act 2020 (Vic); Residential Tenancies Act 1997 (Vic) – Part 16 sections 545 and 546 – Victorian Civil and Administrative Tribunal Act 1998 (Vic) section 126 – severe hardship-early termination of fixed term lease due to severe hardship – inability of renter to return to Australia and financial circumstances sufficient to establish severe hardship – application by residential rental provider for break lease costs dismissed.	

APPLICANT (R2021/10298)/ RESPONDENT (R2021/10712)	Lixuan Duan	
RESPONDENT (R2021/10298)/ APPLICANT (R2021/10712)	V Diamond Pty Ltd atf V Diamond Family Trust	
WHERE HELD	Melbourne	
BEFORE	A Moon, Member	
HEARING TYPE	Hearing	
DATE OF HEARING	3 April 2023 and 28 June 2023	
DATE OF ORDER and Written Reasons	12 September 2023	
CITATION	Duan v V Diamond Pty Ltd atf V Diamond Family Trust (Residential Tenancies) [2023] VCAT 1050	

Order in Proceeding R2021/10298
For the written reasons provided, the Tribunal orders that:
1	Pursuant to section 126 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) the Tribunal extends the time for the commencement of this proceeding to the date of the application. 
2	The Residential Tenancies Bond Authority is directed to pay the following:
To the residential rental provider the amount of $65.72
To the renter the amount of $2,814.28.
3	The claim for break lease costs is dismissed.
4	The principal registrar is directed to place a copy of these Orders and reasons on file number R2021/10712. 
Order in Proceeding R2021/10712
For the written reasons provided, see orders made today in proceeding R2021/10298.

A Moon
Member			

APPEARANCES:		
For the applicant (R2021/10298)/ respondent (R2021/10712)	In person and Ms Butler, solicitor	
For the respondent (R2021/10298)/ applicant (R2021/10712)	Mr Deng, estate agent	

Reasons
1	The application of the COVID-19 pandemic legislation is the determining factor in this dispute between renter and residential rental provider.
2	Lixuan Duan, the renter, was caught overseas during travel restrictions in 2020/2021 and gave the residential rental provider a notice to vacate under the COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic) (‘COVID-19 Act’), which introduced Part 16 into the Residential Tenancies Act 1997 (Vic) (the ‘RT Act’).
3	After handing back possession, the renter made application for the return of their bond, which was heard at the same time as the subsequent bond and compensation claim of the residential rental provider (V Diamond Pty Ltd atf V Diamond Family Trust). The residential rental provider’s application sought rent from 7 March 2021 to 6 June 2021, pro rata advertising costs and pro rata leasing costs totalling $5,952.75.
4	The applications were made under section 416 and sections 417 and 210, respectively, of the RT Act that was in effect at the time.
5	After a number of adjournments granted in both proceedings to assist both the renter and the residential rental provider, the hearing concluded on 28 June 2023.
6	The renter was represented by Ms Butler of the University of Melbourne Student Union Legal Service. The renter sought written reasons for the decision on the basis that “the legal questions raised by these matters affect a large number of tenants who ended their tenancy agreements on the same legal basis while experiencing severe hardship during the COVID-19 pandemic”.
7	For the reasons that follow, I have determined that there is one days’ rent payable to the residential rental provider and the renter is entitled to the balance of their bond.
Extension of Time Application
8	A residential rental provider must file their application for payment of the bond within 10 business days after a renter delivers up possession of rented premises. Where, as here, the residential rental provider fails to apply within time, it is standard practice to make an application to extend time pursuant to section 126 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (‘VCAT Act’).
9	VCAT frequently uses the provisions of section 126 of the VCAT Act to extend the time for making an application. The overriding purpose of the provision is to enable justice to be done. Further, VCAT has said that the purpose of section 126 “is to enable matters to be determined, rather than avoided, on their real and substantial merits and not based on technical points or slip-ups”.
10	In this case the residential rental provider was two (2) business days late in applying for the payment of bond. The renter had already made application for payment of the bond to herself as the return of the bond was being disputed. The late filing of the application has not caused any detriment to the renter and it is appropriate to extend the time to make the application to the date of lodgment. Orders will be made to this effect.
Residential rental agreement
11	The renter commenced renting the rented premises in 2019 on a twelve month fixed term, with payment of a bond of $2,880. A second twelve month fixed term was entered into in 2020. No advertising or renewal commission fees were paid by the residential rental provider to its estate agent in respect of the renter’s second fixed term. 
12	In August 2020, the renter went home to China for a visit but due to the imposition of travel restrictions at that time was unable to return to Australia.  The renter continued to pay the rent for the rest of 2020, despite what she advised were her difficult financial circumstances, although she sought two rental reductions from the residential rental provider. 
13	In February 2021, the renter gave the residential rental provider a 14 day Notice of Intention to Vacate expiring on 7 March 2021 and subsequently returned the keys to the premises on 6 March 2021. The renter paid rent to 6 March 2021.
14	On 17 March 2021, the renter applied to VCAT for a return of her bond relying on the COVID-19 Act protections.
15	On 24 March 2021 the residential rental provider filed an application for bond and compensation for losses said to have been sustained by the residential rental provider by reason of the renter breaking the fixed term lease. 
COVID-19 Act protections 
16	The COVID-19 Act introduced the following relevant protections for renters:
a.	under section 545 of the RT Act a renter could give a 14 day notice of intention to vacate if the renter was suffering severe hardship. 
b.	under section 546 of the RT Act a renter was not liable to a residential rental provider for compensation or lease break fees or charges if the renter was suffering severe hardship at the time the renter validly terminated the lease under section 545.
17	The question of what constitutes severe hardship is a question of fact that has been examined in many cases by VCAT and the Courts over the last few years.
18	In Cosic v Director of Housing & Anor (when considering an appeal of an application for the creation of tenancy under sections 232 and 233 of the RT Act), Forrest J stated that in considering hardship “that any appreciable detriment is relevant”. The Court then quoted and affirmed the statement by Asprey J in FG O’Brien Ltd v Elliott – 
There is no definition of ‘hardship’ in the Act. In its context I would be of the opinion that ‘hardship’ would comprehend any matter of appreciable detriment whether financial, personal, or otherwise. Each case must depend upon its own particular facts. 
19	Forrest J went on to then give consideration to the word “severe”, referring to the decision of Mobilio v Balliotis (‘Mobilio’s case’), saying that a “high level of hardship” needed to be determined. Mobilio’s case concerned a consideration of a change in the phrase “serious” to “severe”, and while the Full Court said that it was not prepared to provide an adjective for “severe”, it went on to say that it is a stronger word than “serious”.
20	The dictionary meanings for “severe” include “substantial or enduring as distinguished from trivial or transitory” – “rigorous, strict or harsh” (Oxford) – “harsh or extreme” (Macquarie) – “serious, extreme or life threatening”.
21	Much of the hearing focused on the renter’s financial situation to establish she was suffering severe hardship. However it is noted that the renter’s prolonged inability to use the rented premises arising from travel restrictions during the COVID-19 pandemic also gives rise to a claim of severe hardship. 
Residential rental provider’s claim
(a) Claim for Pro-Rata Advertising and Re-Leasing Commission Fees
22	Mr Deng, the estate agent for the residential rental provider, gave evidence that his agency had not charged any advertising or commission fees on the re-signing of the second term of the residential rental agreement in 2020. He acknowledged that the residential rental provider had not suffered any advertising or commission loss in respect to the second term of the residential rental agreement and that no claim for compensation could be made in respect to advertising or commission. At the hearing on 3 April 2023 the estate agent withdrew the claim for pro-rata advertising and re-leasing fees and VCAT recorded that withdrawal of claim in its Orders dated 3 April 2023. 
(b) Claim for Compensation for Unpaid Rent and Rent Loss
23	The residential rental provider seeks unpaid rent of one day for 7 March 2021, the termination date in the notice of intention to vacate. The provider seeks compensation, equivalent to the rent payable under the agreement, for rent loss from 8 March 2021 to 6 June 2021 (the last day of the second fixed term period).
24	At the hearings on 3 April 2023 and 28 June 2023, the renter gave evidence that:
a.	In August 2020 the renter went overseas to visit family and was unable to return to Australia due to travel restrictions. She continued to pay rent to the rental provider.
b.	By February 2021, the renter’s financial situation had become dire and she could not afford to continue to pay rent to the residential rental provider. As a result of her financial circumstances the renter gave the residential rental provider a 14-day Notice of Intention to Vacate (‘NITV’) with a termination date of 7 March 2021. Included with her NITV were copies of bank statements and her applications to the University of Melbourne for extensions of time to pay her university fees. These were included to demonstrate to the residential rental provider the veracity of her claim that she was suffering financial hardship that entitled her to terminate the agreement;
c.	The renter paid the rent to 6 March 2021; and
d.	The renter’s parents’ business had suffered financial difficulties as a result of the COVID-19 lockdown in China. Accordingly her parents were unable to financially support her in the payment of rent under the residential rental agreement.
25	At the hearing on 3 April 2023, in questioning the renter, the estate agent sought further evidence of the renter’s financial difficulties, in particular, by pointing out that the renter’s bank statements provided to date indicated the existence of a second bank account in the renter’s name, with bank statements that had not been provided.
26	Mr Deng also claimed that the conditions contained in the renter’s visa that required her parents to, in effect, guarantee payment of the rent allowed him to examine the renter’s parents’ financial situation when considering whether the renter was entitled to claim financial hardship as the grounds for severe hardship under the COVID-19 protections relied on by the renter.
27	I adjourned the hearing on 3 April 2023 to allow the renter the opportunity to provide the additional bank statements as requested by the residential rental provider.
28	Prior to the resumption of the hearing on 28 June 2023, the renter filed with VCAT and sent to the residential rental provider additional bank statements from the second account ending with the numbers 0232 to demonstrate that her second account did not contain additional funds that could have been available to pay rent in 2021. These second bank account records were supportive of the renter’s claim that she had no additional funds or income with which to pay the rent for the rented premises. The renter also gave evidence that she did not have any other bank accounts or funds. The agent was not able to disprove this evidence and I accept the renter’s evidence.
29	At the hearing on 3 April 2023, I found that the conditions contained in the renter’s visa were not pertinent to the question of whether the renter was suffering severe hardship. Any conditions on the visa did not form part of the residential rental agreement and were therefore not relevant to the claim before VCAT. Similarly, the financial position of the renter’s parents was not relevant to the renter’s duties under the RT Act.
30	I note that nevertheless the renter gave evidence that her parents were not in a financial position to advance her monies to continue to pay the rent either.
Was the renter suffering Severe Hardship at the time she gave the NITV?
31	As stated above the renter’s evidence to VCAT was that she could not return to Australia because of travel restrictions and she had to seek extensions of time to pay her University of Melbourne Fees. Further the renter’s bank accounts did not demonstrate she had any savings to pay the rent and she was not working.
32	I accepted the renter’s evidence that she was not in receipt of income at the relevant time when she gave notice that she was terminating the residential rental agreement.
33	I find that the renter’s inability to return to Australia and her financial situation meant that her hardship was severe. There was no evidence from the residential rental provider to counter the renter’s evidence of severe hardship.
34	The renter’s severe hardship entitled her to make use of the COVID-19 Act protections provided by section 545(1)(e) of the RT Act to terminate the lease giving 14 days’ notice, irrespective of the fact that there was a fixed term lease in place.
COVID-19 Act protections and impact on the compensation claim
35	The residential rental agreement terminated on the termination date of the NITV, being 7 March 2021. The renter paid rent up to and including 6 March 2021. The renter owes rent for the last day of the residential rental agreement in the amount of $65.72 and an order will be made to that effect, with payment of this amount to come from the bond.
36	Under section 546, the renter is not liable to compensate the residential rental provider for loss suffered by the residential rental provider as a result of the early termination of the residential rental agreement. Therefore the balance of the claim by the residential rental provider for rent after the termination of the residential rental agreement will be dismissed.
37	A direction will be made to the Residential Tenancies Bond Authority to pay to the residential rental provider the amount of $65.72 and the balance of the bond to the renter, being an amount of $2,814.28.

A Moon
Member