Liu v Tang
[2022] VSC 243
•18 May 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2021 04409
| YAN LIU | Applicant |
| v | |
| HUY PHENG TANG | Respondent |
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JUDGE: | Gorton J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 6 May 2022 |
DATE OF JUDGMENT: | 18 May 2022 |
CASE MAY BE CITED AS: | Liu v Tang |
MEDIUM NEUTRAL CITATION: | [2022] VSC 243 (First Revision 23 May 2022) |
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APPEAL – Appeal from Victorian Civil and Administrative Tribunal – Residential tenancies – Whether tribunal erred in making possession order – Notice to vacate for non-payment of rent – Whether notice to vacate valid – Notice to vacate included rental arrears during COVID-19 ‘emergency period’ – Notice to vacate issued during COVID-19 ‘transition period – Appeal allowed – Markiewicz v Crnjac [2021] VSCA 290.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Litigant in person | |
| For the Respondent | Litigant in person |
HIS HONOUR:
A. Introduction
Mr Liu, the applicant, leased residential premises in Maidstone from Mr Tang, the respondent. Mr Liu fell behind in his rent payments during the COVID-19 pandemic. Mr Liu visited China, and could not return for more than a year, during which time he ceased paying rent, or at least the rent that was owing under the terms of the written agreement. On his return, Mr Liu moved back into the premises, but did not pay the rent that was owing under the terms of the written agreement. Mr Tang took steps to recover possession of the premises. On 25 October 2021, the Victorian Civil and Administrative Tribunal (‘VCAT‘) ordered that Mr Liu vacate the premises by 25 October 2021, that Mr Liu pay rent owing of $29,055, and that the registrar of VCAT issue a warrant of possession at the request of Mr Tang made after 23 November 2021. Mr Liu seeks leave to appeal against those orders. Any appeal is limited to an appeal on a question of law.[1]
[1]Victorian Civil and Administrative Tribunal Act 1998 (Vic) s 148(1).
B. The notice to vacate and amount ordered included amounts not then payable
The immediately-relevant starting point of Mr Tang’s efforts to recover possession of the property was a notice to vacate[2] he served on Mr Liu for the non-payment of rent.[3] The notice to vacate was dated 8 July 2021, posted on 9 July 2021, and asserted that Mr Liu owed $22,901 in rental arrears for the period since 9 April 2020. Some rent had been paid irregularly, but this was the balance said then to be outstanding. The notice to vacate asked that Mr Liu vacate the premises by 31 July 2021, but provided, in accordance with the statutory requirements, that if the rent was paid in full before that date then the notice to vacate would have no effect. Mr Liu did not pay the rent referred to in the notice to vacate, and on 3 August 2021 Mr Tang commenced a proceeding in VCAT for an order for possession. The proceeding came on for hearing on 25 October 2021. The rent remained unpaid as at that time.
[2]Residential Tenancies Act 1997 (Vic) s 91ZZO.
[3]Ibid s 91ZM.
The situation was complicated by the legislated relief provided as a result of the COVID-19 pandemic.[4] Under the legislated relief provided, Mr Liu was taken ‘not to have breached’ his obligation to pay rent during the ‘Emergency Period’ between 29 March 2020 and 28 March 2021,[5] if that breach was because of a ‘COVID-19 reason’.[6] It was not suggested that Mr Liu’s absence from Australia due to the restrictions on travel associated with the COVID-19 pandemic was not a ‘COVID-19 reason’ for his ceasing to pay rent. That protection was then extended through the ‘Transition Period’ to 25 October 2021.[7] Also, Mr Tang could not issue a notice to vacate for non-payment of rent during the ‘Emergency Period’.[8] Mr Liu did not apply for or obtain any of the rent reduction or other measures available under the legislation introduced to deal with the pandemic.
[4]See the COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic), and the COVID-19 Commercial and Residential Tenancies Legislation Amendment (Extension) Act 2020 (Vic). See also Markiewicz v Crnjac [2021] VSCA 290, [11]–[28] (Emerton, Sifris JJA and Macaulay AJA).
[5]COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic) s 542.
[6]Ibid s 537.
[7]COVID-19 Omnibus (Emergency Measures) Transitional Regulations 2021 (Vic) r 14; COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic) ss 62(6), 64; COVID-19 Commercial and Residential Tenancies Legislation Amendment (Extension) Act 2020 s 9.
[8]COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic) s 544.
Three things happened on 25 October 2021:
(a) VCAT heard Mr Tang’s application for an order that Mr Liu vacate the premises and for an order that he pay the rental arrears;
(b) the ‘Transition Period’ had its last day; and
(c) the Court of Appeal published reasons for its decision in Markiewicz v Crnjac (‘Markiewicz’).[9] In that decision, the Court of Appeal explained that:
[9][2021] VSCA 290.
(i) non-payment of rent for a COVID-19 reason for the period between 29 March 2020 and 28 March 2021 (the ‘Emergency Period’) was a ‘deemed non-breach’ of a residential rental agreement during that period and during the period between 29 March 2021 and 25 October 2021 (that is, during the ‘Transition Period’);[10]
[10]Ibid [87], [100], [113] (Emerton, Sifris JJA and Macaulay AJA).
(ii) non-payment of rent for the period between 29 March 2021 and 25 October 2021 (the ‘Transition Period’) was a breach in the ordinary way;[11] and
(iii) rental arrears attributable to the period between 29 March 2020 and 28 March 2021 (the ‘Emergency Period’) nonetheless accrued, and became payable from 26 October 2021 (that is, after the ‘Transition Period’).[12]
[11]Ibid [2], [11].
[12]Ibid [115]-]116].
That decision was not, of course, referred to by the parties or before VCAT at the time it made its decision.
The 8 July 2021 notice to vacate was prepared, and the VCAT hearing took place, during the Transition Period. Before me, Mr Tang, who was not legally represented but who sought from me and obtained permission for his daughter to address me on his behalf, very fairly accepted that, having regard to Markiewicz, the majority of the $22,901 referred to in the notice to vacate was for rent that had accrued during the Emergency Period that Mr Liu was not then required to pay (i.e. Mr Liu’s non-payment was a ‘deemed non-breach’ of the residential rental agreement). Ms Tang accepted that the notice to vacate should instead have referred to rental arrears of only $7,407. She also said that, by the time of the VCAT hearing, the amount of rent payable had increased to $10,551.
C. Consequences of the notice to vacate overstating the amount then payable?
Section 91ZM of the Residential Tenancies Act 1997 (‘the Act’) provides that on an ‘occasion of non-payment of rent’, the residential rental provider may give a ‘notice to vacate under this section’ to the renter, and that if the renter does not pay ‘the unpaid rent’ on or before the ‘termination date in the notice’, the residential rental provider may apply to VCAT for a possession order.
An ‘occasion of non-payment of rent’ is defined to mean an occasion where the renter owes at least 14 days rent within a 12-month period. Here, when the notice to vacate was prepared on 8 July 2021, Mr Liu did owe at least 14 days’ rent, because he owed the rent that had accrued during the Transition Period.
Section 322 of the Act permits a residential rental provider to apply to VCAT for a possession order if the residential rental provider has given the renter a notice to vacate and the renter has not delivered up vacant possession of the premises. Section 330 of the Act then requires VCAT to make a possession order requiring a renter to vacate rented premises if VCAT is satisfied that (among other things):
(a) the residential rental provider was entitled to give the notice to vacate; and
(b) it is ‘reasonable and proportionate’ to make a possession order taking into account the interests of, and the impact on, the residential rental provider and the renter.
Section 91ZZO of the Act provides that a notice to vacate ‘is not valid’ unless, among other things, it is in the relevant prescribed form. The prescribed form is Form 6 of the Residential Tenancies Regulations 2021.[13] The form requires the rental provider to ‘explain why the notice has been given’ and that this to be ‘accompanied by specific details.’ It states that ‘VCAT may find a notice to vacate invalid if the notice does not provide enough details’.
[13]Residential Tenancies Regulations 2021 (Vic) r 37.
Finally, s 334 of the Act provides that if a possession order is made in respect of rented premises, the residential rental agreement terminates at the end of the day before the day on which possession of the rented premises is delivered up to the residential rental provider.
In my judgment, it is implicit in the legislation that a notice to vacate based on the non-payment of rent must not overstate (at least in any significant way) the rent that is then actually owing, and that if it does so then it is invalid and cannot form the basis for an order by VCAT for possession for non-payment of rent. This is because if the notice to vacate is invalid, then VCAT does not have jurisdiction because the power to go to VCAT is conditional on the prior service of a valid notice.[14] If it were otherwise, the renter would be put in a very difficult position: in order to comply with the notice to vacate and thereby prevent the rental provider from going to VCAT for an order for possession, the renter would be obliged to pay more rent than was then owing. Mr Tang did not argue to the contrary.
[14]See Smith v Director of Housing [2005] VSC 46, [14], [23] (Bongiorno J); Jafarpourasr v Tancevski [2018] VSC 497, [43]–[48] (Daly AsJ).
Here, the notice to vacate substantially overstated the rent that was then owing by Mr Liu. This error was understandable in light of the complicated legislative regime and given that the notice to vacate was prepared prior to the Markiewicz decision. But the fact remains that it claimed a substantial amount of rent relating to the ‘Emergency Period’, at a time when Mr Liu was still deemed not to be in breach for the non-payment of rent during that period; in that sense, it claimed rent that did not have to be paid. Accordingly, in my view it was not a valid notice to vacate.[15]
[15]Markiewicz [116] (Emerton, Sifris JJA and Macaulay AJA).
It follows that, in my view, VCAT had no jurisdiction to make the orders sought, with the result that the orders must be set aside.
D. The notice of appeal
Mr Tang did not accept that the validity of the notice to vacate was raised by the proposed notice of appeal.
The first question of law in the proposed notice of appeal was in these terms:
1. Was VCAT correct to apply s 91ZM that rent arrears in the case were COVID-19 rent arrears under S 542 pt16 until 28 March 2021, reg 14 extended restricting operation of s 91ZM in respect of the COVID-19 Omnibus until 25th OCT 2021?
The first ground of appeal was in these terms:
1. In April 2020, Parliament enacted part 16 into the Residential Tenancies Act 1997 (‘RTA’). Part 6 included s 542, which provided that where a tenant would otherwise be in breach of their tenancy agreement, they were taken not to be in breach if the failure to comply was because of a ‘COVID-19 reason’ (as defined in the newly enacted s 537 – this definition is set out in paragraph 15 of the Markiewicz decision). Part 16 (including s 542) operated from 29 March 2020 to 28 March 2021 (the ‘Emergency Period’). Regulation 14 of the COVID-19 Omnibus (Emergency Measures) Transitional Regulations 2021 (‘Regulations’) provided that the protection given by s 542 for breaches occurring during the Emergency Period was to continue to have effect in relation to those breaches (but not subsequent breaches) until 25 October 2021 (the ‘Transition Period’).
In Markiewicz, the Court of Appeal found that the Notice to Vacate given to the renter in that case during the Transition Period was not valid despite her failure to pay the full amount of rent during the Emergency Period. This was due to the fact that, because of s 542, the renter was not in breach of the lease during the Emergency Period and that protection continued during the Transition Period so that no rent in the form of arrears was ‘owing’ during either Period. Above case and regulations is very similar to my case and situation. I have been affect by COVID-19 severely I lost my job, suffered major car accident trauma caused strokes, betrayal of a friend stole my dog and assets, my place got broke into substantial lost to my belongings saved over the years list goes on during COVID-19. I have been living at this property for more than 10 years I have always paid my rent before the pandemic.
Reading these together, and making due allowance for the fact that neither Mr Liu nor Mr Tang has been legally represented in this proceeding, I consider that these paragraphs sufficiently raise the question of whether the notice to vacate sought payment of rent that was not then owing because of the protective regimes introduced with the COVID-19 pandemic.
It is not necessary to consider the other grounds of appeal.
E. Further observations
On 25 January 2022, VCAT issued a warrant for possession of the premises at the request of Mr Tang. On 6 April 2022, a judicial registrar in this Court stayed the operation of the 25 October 2021 VCAT order and any execution of the warrant, on condition that Mr Liu pay to Mr Tang the sum of $850 per fortnight. When the matter came before me, Mr Liu was two payments behind.
It is common ground that Mr Liu has not paid rent in accordance with the residential rental agreement. He contends, but Mr Tang disputes, that they reached an oral variation of the amount of rent that would be payable over the COVID-19 pandemic period. The period of protection from eviction introduced in response to the COVID-19 pandemic has now passed. I did not understand Mr Liu to be disputing that he is currently obliged to pay rent in accordance with the written agreement. But Mr Liu told me, in substance, that he simply cannot afford to pay the rent on these premises. He claims to have no savings, no job, to be unwell, and to be awaiting some form of disability support. He did so with a view to persuading me, as I understood it, that VCAT had in some way erred in ordering him to vacate the premises. When it was explained to him that his failure to make the fortnightly $850 payment meant that he was in breach of VCAT’s order and there was currently nothing staying the execution of the warrant, after the matter was stood down for a short time he informed me that he had just electronically transferred $1,020 to Mr Tang, and that he could pay the balance in cash immediately. He said he borrowed money in order to do so. He paid over the balance outstanding in cash, and Mr Tang confirmed that the moneys had been received.
Mr Liu also informed me that he wished to leave the premises and would do so within three weeks or a month, although, as noted above, he did not accept that he owed the level of arrears that Mr Tang contended that he owed. Nothing I have said in these reasons is intended to preclude Mr Tang from taking whatever steps he thinks fit in order to recover any rental arrears that he contends remains unpaid or from taking steps, if he wishes to do so, to seek another order for possession. Nor is it intended to prevent either party from presenting such arguments as they think fit on the question of what arrears of rent, if any, is owed.
Finally, Mr Tang filed a summons in which he sought summary dismissal of this application. His contention was that the application ought to be summarily dismissed both because Mr Liu was failing to comply with Court orders, and because he considered that the application was without merit. In the circumstances, this summons will be dismissed.
F. Disposition
In accordance with my reasons above, I propose to grant leave to appeal and to set aside the orders made in the VCAT proceeding that was initiated following the service of the notice to vacate, and to dismiss Mr Tang’s summons for summary dismissal.
I will hear the parties on the form of order and on the question of costs.
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