Recalcitrant tenants take advantage of jurisdictional blackhole – watch this space.

As confirmed by the High Court’s decision in Burns v Corbett [2018] HCA 15, state tribunals, such as VCAT, do not have the jurisdiction to hear disputes between interstate parties.

VCAT, however, is the exclusive forum for retail tenancy disputes pursuant to sections 81 and 89 of the Retail Leases Act 2003 (Vic) (RL Act). Ordinarily, residential tenancy disputes would also be brought in VCAT pursuant to section 446 of the Residential Tenancies Act 1997 (Vic) (RT Act).

So, where do you go for tenancy disputes, retail or residential, if you are a landlord living interstate from your rental property?

If a residential tenant is in arrears totalling $10,000 or more, landlords (or their agents) may be able to bring proceedings in the Magistrates’ court, the County Court, or the Supreme Court, pursuant to sections 509 and 510 of RT Act.

In that instance, the dispute falls outside the jurisdiction of VCAT pursuant to section 477 of the RT Act (which provides the limits of the VCAT’s jurisdiction), and the Magistrates’, County or Supreme Court’s may exercise the same powers as VCAT would have had if the application were heard and determined by it.

Nonetheless, whether the Courts have the jurisdiction to terminate a tenancy, or to make orders for possession of the rental property pursuant to sections 509 and 510 is unclear, as those sections only provide jurisdiction in matters which, but for section 447, VCAT would have been able to hear.

If there are no such arrears, or on a more conservative view: in any event if orders for possession are sought, landlord’s may need to incur the cost and expense of bringing an action in the Victoria’s highest court, the Supreme Court, pursuant to its unlimited jurisdiction.

In respect of retail leases, pursuant to the RT Act, disputes between interstate parties (and parties, generally) may only be brought outside of VCAT if the dispute is not a “retail tenancy dispute”. The meaning of a retail tenancy dispute is broad, but will not include disputes relating solely to the payment of rent.

All of this might seem a little much to evict a recalcitrant tenant, and interstate landlord’s and their agents may find themselves unsure of where to go, particularly if rental arrears are not in issue.

Fortunately, the Victorian Civil and Administrative Tribunal and Other Acts Amendment (Federal Jurisdiction and Other Matters) received royal assent on 10 August 2021 and when operable, will allow the Magistrates Court to hear interstate party matters.

Harwood Andrews regularly advises on retail and residential tenancies, and acts in disputes arising from same. If you are a landlord, there are ways in which you can otherwise mitigate your exposure to the situation described above. You might consider holding your property portfolio via an entity based in the state where your property is, or effecting a concurrent lease with an appropriate state based entity or person.

Please get in touch if we can be of any assistance.

Ali Erskine
Principal
M 0419 884 992 | T 03 5225 5208 |
E aerskine@ha.legal

Richard Anderson
Principal
M 0419 533 974 | T 03 5226 8524
E randerson@ha.legal

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice.