The Law Handbook 2024

504 Section 6: Houses, communities and the road hearing to give evidence in person. It is better to have a witness attend the hearing than give their evidence in writing or a statutory declaration. At the hearing the renter should explain how they fell behind in rent and how they intend to repay the overdue rent. If VCAT is convinced that the renter had a good reason for falling behind in the rent, that the renter intends to repay the amount owed, and that the renter can afford to pay the rent in the future, it will generally exercise its discretion not to evict the renter. If VCAT thinks the renter could pay off the overdue rent over time, they can decide to adjourn the application and make an order for a payment plan instead of making a possession order (s 331(2) RT Act). If VCAT is not sure of the renter’s financial ability to enter a payment plan, they can put the application on hold and refer the renter to a financial counsellor who can help assess their financial situation (s 331(1A) RT Act). If VCAT refers the renter to a financial counsellor they may ask the counsellor to write a report or report verbally to VCAT after their assessment (s 331(1B), 331(1C)). This can help VCAT decide if a payment plan should be ordered instead of a possession order. If VCAT decides to make an order for a payment plan, it will generally order that the rental provider’s application be adjourned for a certain period (usually three to six months). If the renter follows the VCAT order and pays their usual rent and overdue rent on the terms in the order, VCAT must dismiss the rental provider’s application for a possession order and the rental agreement continues as normal (ss 91ZM(3), 331(3) RT Act). If the renter fails to pay the instalments, or if they fall behind in their rent again during this period, the rental provider can ask VCAT to renew their application. The rental provider does not have to serve any further notices on the renter in these circumstances. VCAT will send the renter a notice of hearing. The renter should go to the hearing and tell VCAT why they did not, or could not, follow the payment plan order or why they accumulated more overdue rent. If their financial circumstance has become worse, they can ask VCAT to make an order for a different payment plan that they will be able to better follow. As for the first hearing, if VCAT decides the renter can afford to pay the overdue rent and not get further behind with the rent, it may change the payment plan, or order a new one with different payments and time periods (s 331 RT Act). If VCAT decides – at a possession order hearing or a renewed possession order hearing – that the renter cannot afford to pay the overdue rent and their usual rent without getting further behind, it will consider if it is reasonable and proportionate to make a possession order (s 330 RT Act). (See also ‘Reasonable and proportionate test’, below.) Rent owed under a payment plan ordered by VCAT is not considered to be rent arrears for the purposes of issuing a Notice to Vacate (s 91ZM(7)). It is not clear if a rental provider who deliberately delays going to VCAT until the fifth Notice to Vacate will be considered to have abused the process. Fifth Notice to Vacate If the rental provider has given the renter five Notices to Vacate for overdue rent in a 12-month period (counted from the date of the rental agreement or the date the renter moved in) and the renter has not moved out by the termination date in the fifth notice, the law is slightly different. The rental provider can apply to VCAT for a possession order even if the renter paid the unpaid rent before the termination date (s 91ZM(2) RT Act). If the rental provider does apply to VCAT for a possession order, VCAT must make a possession order if it is reasonable and proportionate to do so (s 330). The option to refer the renter to a financial counsellor is not available for the fifth Notice to Vacate. The option to adjourn to allow for a payment plan is also not available as it was for first four notices to vacate (s 91ZM(2) RT Act). However, there is still a possibility that VCAT could dismiss or adjourn the rental provider’s application for a possession order if they do not think it is reasonable and proportionate to make a possession order (ss 91ZM, 330 RT Act). There is limited case law in relation to this, but it is in the renter’s best interest to give as much context as possible as to the reason for the arrears (see Donkin v Gottsche (Residential Tenancies) [2021] VCAT 1553 (21 December 2021)). The renter can also request an extension of time to delay the purchase of the warrant. (See ‘Reasonable and proportionate test’ and ‘Request to postpone the warrant’, below.)