During a tenancy a tenant may seek compensation for loss incurred by the landlord by filing a Breach of Duty Notice supported by all relevant details. Landlords may seek compensation but the onus of proof lies with them.
Compensation claims by the tenant
A tenant may claim compensation from a landlord if:
• the tenant has suffered loss or damage as a result of a breach of duty under the RT Act or a tenancy agreement by the landlord; or
• the tenant has paid more to the landlord than required under the tenancy agreement or RT Act (ss 209, 210).
The RT Act distinguishes between compensation claims based on breaches of a “duty provision” and claims based on other breaches.
Where the tenancy remains in effect, a tenant must usually serve a Notice of Breach on a landlord before claiming compensation for a breach of duty. If the tenancy has terminated, it is no longer necessary to serve a Breach of Duty Notice. An application (under ss 209, 210) may be made directly to VCAT.
A compensation claim should include evidence of the breach and loss, the first communication of the issue to the landlord, the number of days the issue persisted for, and when the issue was rectified (if at all). Parties should identify each issue and the loss they suffered as a percentage of their daily rent. Additional and discrete losses may also be claimed.
For example, an electrical fault is reported to a landlord and the landlord fails to attend. Two weeks later, the electricity shorts out and cannot be restored without intervention. The landlord does not affect repairs until seven days later, when an electrician arrives and restores power. All the food has been spoiled, and the family has been unable to use much of the premises.
The tenant may claim for loss of quiet enjoyment of the premises due to no electricity for seven days. If the daily rent is $50, and the tenant believes the loss is 50 per cent. Then the sum claimed is $50 x 7 x 0.5 = $175, plus loss of food and other reasonable expenses for which the tenant should provide receipts.
Ultimately, VCAT may reduce any claim. Generally, VCAT will not increase the amount claimed for a tenant. Therefore, parties should be reasonable, and err on the side of making a larger claim, but expect that they will likely be reduced to a more reasonable amount.
Parties should also pay particular attention to factors outlines in section 211 of the RT Act regarding what VCAT considers when determining fault and amounts of compensation payable. Section 211 allows VCAT to consider a wide range of factors including the parties’ conduct and reasonable offers, actions and inactions leading up to the point of VCAT’s determination.
VCAT has jurisdiction to hear claims of up to $10,000, or a higher amount if the parties agree. RT Act listed matters cannot hear claims for compensation for death, personal injury, or pain and suffering (s 447).
The cost of a basic VCAT application is $61.50; this fee is indexed annually. Under the VCAT Act (s 132), parties may be eligible for fee waivers. Parties are presumed to bear their own costs of proceedings (s 109). However, if parties’ conduct causes delay or procedural disadvantage to other parties, VCAT has discretion to award costs.
Costs may be awarded against a party, where an offer has been rejected and the subsequent VCAT decision is less favourable than the offer made. Rejected offers that may give rise to such costs must comply with sections 113 and 114 of the VCAT Act.
If a party is successful (or has substantially succeeded) in their application, the unsuccessful party may be directed to reimburse the successful party their application fee. An applicant should include in their application a request to have their application fee reimbursed. This is at the discretion of VCAT (s 115A–D VCAT Act). Refer to the VCAT fee schedule and the fee waiver grounds on VCAT’s website (www.vcat.vic.gov.au).
Parties may concurrently invoke the Australian Consumer Law and Fair Trading Act 2012 (Vic) (“ACL&FTA”). This can be done by referring to section 184 of the ACL&FTA, and checking the correct box on the general application form. This means applications may be made for amounts greater than $10,000. Such applications may attract higher application fees. However, it is necessary to show the relationship was in trade and commerce (s 182 ACL&FTA). Contact Tenants Victoria for advice (see “Contacts”).
Under the ACL&FTA, VCAT may also consider the Australian Consumer Law (ACL), which is contained in schedule 2 of the Competition and Consumer Act 2010 (Cth). If cited as part of the application, VCAT may consider issues such as:
• “misrepresentation” (ss 29–30 ACL);
• “unconscionable conduct” (ss 21–22 ACL);
• “unfair contract terms” (ss 23–28 ACL; s 185 ACL&FTA);
• “bait advertising” (s 35 ACL);
• guarantees as to “fitness for purpose” (s 61 ACL);
• whether goods or services have been rendered with due skill and diligence (s 60 ACL).
The ACL&FTA also provides VCAT with a wide range of remedies to resolve disputes (ss 184–185; pt 8.2 ACL&FTA). For more information, see Section 7 (Consumers, contracts, the internet and copyright).
It may also be possible to make personal injury claims under the ACL&FTA for claims less than $10,000 (s 182(3)). However, it is strongly advised to consult with a personal injuries expert before proceeding with any such claim at VCAT. Given the complexity, gravity, unique time limits and other issues arising out of such claims, parties may wish to use the Law Institute of Victoria’s Find a Lawyer Legal Referral Service (see Legal representation).
Claims under contract can be made at any time up to six years after the alleged loss or damage has occurred. After such time, an application may be statute barred. In some cases, a persistent breach will simply have a reduced eligibility for compensation; in other matters, it may be fatal to a claim.
It is advisable to take action as soon as practicable, or pay careful attention to limitation dates.
The success of the claim will depend on what the tenant is able to prove at VCAT. If the tenant makes a claim, the tenant has the onus of producing evidence that establishing on the balance of probabilities that:
• the landlord breached the tenancy agreement or the RT Act; and
• the breach caused loss or damage (or occasionally, substantial quantifiable inconvenience); and
• that the amount the tenant is claiming as compensation is reasonable.
If the landlord or agent has committed certain breaches of the RT Act or the tenancy agreement, the tenant should serve them with a Breach of Duty Notice in order to claim compensation (s 208).
The types of breaches for which a notice might be served are discussed in “Landlord and tenant duties” above. This notice must:
• specify the breach;
• give details of the loss or damage caused by the breach;
• require the landlord to remedy the breach or pay compensation within 14 days;
• state that the landlord must not commit a similar breach again; and
• state that if the notice is not complied with, an application may be made to VCAT.
The notice must be in writing, addressed to the person allegedly in breach of the duty and be signed by the person giving the notice (s 208). The tenant can give this notice in the form of a letter, however given the requirements of (s 208) it is advisable to use the prescribed “breach of duty notice” form.
It is recommended that the tenant send the notice by registered mail in case of a dispute about service. Alternatively, if parties have consented within the meaning the Electronic Transactions (Victoria) Act 2000 (Vic), the notice may be served via email.
If the landlord does not pay the compensation claimed or comply within 14 days, the tenant may then apply to VCAT for a compensation or compliance order (s 209).
If the landlord or agent has breached the RT Act or the tenancy agreement but the breach was not of a duty provision (e.g. damage was caused to the tenant’s goods during entry by the landlord or their agent), or if the claim is for repayment of moneys overpaid, the tenant may apply to VCAT without first serving any notice (s 210).
However, in some cases it is recommended that the tenant serve a notice on the landlord or agent even if the breach was not of a duty provision. This gives the landlord details of the claim, and an opportunity to agree to payment. The tenant’s application to VCAT for compensation must give details of the breach and of the loss or damage caused by the breach (r 7A.10(2) VCAT Rules).
A landlord may claim compensation from a tenant if:
• the landlord has suffered loss or damage as a result of a breach of duty under the RT Act or a breach of the lease by the tenant; or
• the landlord has paid more to the tenant than required under the lease or RT Act (ss 209, 210).
If making a claim for compensation, the landlord bears the onus of proof and must establish that:
• the tenant breached the lease or the RT Act;
• they have sustained loss or damage;
• the loss or damage resulted from the tenant’s breach of the lease or the RT Act; and
• the amount they are claiming is reasonable.
The landlord must provide evidence to support their claim, and must give the tenant copies of any documents or photos they present to VCAT.
It is prudent for parties to ask for in writing any document they wish to see prior to the hearing. If a document is not provided prior to the hearing, parties may wish to consider requesting an adjournment on the basis of procedural fairness, or raise the issue with VCAT with respect to credibility.
According to VCAT Rule 7A.10(1), an application for compensation must state the amount of compensation being claimed.
While it is the landlord’s obligation to prove their claim, it is prudent for the tenant to provide any evidence that shows:
• they did not breach any duty under the RT Act or the tenancy agreement;
• the breach did not cause the loss or damage claimed by the landlord; or
• the amount claimed is excessive/unreasonable in the circumstances.
If the tenant agrees that they are liable for some of the landlord’s losses, but believe that the amount the landlord is claiming is unreasonable, the tenant should provide evidence of this. The landlord has a duty to keep any loss they suffer to a minimum, and if they have not done so, they may not be entitled to claim compensation from the tenant.
If the landlord is claiming an amount for repairs or replacement of property or fixtures (e.g. to replace carpet, or repaint rooms) that the tenant believes is excessive, the tenant should get quotations from tradespeople or shops to show this. If the property was damaged or worn before the tenant moved in, the tenant should also point this out. The tenant may wish to make a written request for the original receipts or invoices of when the particular items being claimed as needing repair were purchased as new, to raise the issue of age and whether the effective life of the item has been exhausted.
The landlord cannot claim the full cost of replacing something that was not new when it was damaged, and VCAT will generally allow for “depreciation” and “fair wear and tear”. The landlord’s actions in repairing the damage must also be reasonable and in proportion to the amount of damage caused.
The tenant should be prepared to argue about both their responsibility for the damage, and about the amount they should have to pay if VCAT finds that they are responsible.
A party who has been unable to or has not known about a hearing may apply for a review within 14 days of becoming aware of an order (s 120 VCAT Act).
It can usually be identified that a party did not attend a hearing, at end of the VCAT orders. A statement indicating no attendance by the party or their representative will usually be noted as part of the orders.
Once the review has been lodged, the previous VCAT orders are usually stayed and will not be enforceable until the matter has been reheard. If there are any doubts, parties should contact the VCAT registry.
Applications for review can be found on the VCAT website.
Once a review application has been lodged, VCAT will send out a Notice of Hearing to determine if a review should be granted. If the review is granted, the matter will immediate proceed reopen the substantive issues of the original application.
Parties should contact VCAT frequently once a review application has been lodged to ensure they do not miss the review hearing. If a party misses a review hearing and is seeking to make a second review application, they must get leave from VCAT and apply in person (4.19(2), 6.23 VCAT Rules).