The applicant's position was that the rental provider, as a mortgagee, needed to obtain possession and sell the rented premises due to the owner's default on a loan of $660,000. As at 22 October 2025, the amount owed by Mr Liang had grown to about $1,300,000. Based on the estimated sale price, there was likely to be a significant shortfall of about $500,000. Any funds not recouped through the sale would be owed by Mr Liang. The applicant submitted that it had a statutory duty under section 77 of the TLA to Mr Liang to consider his interests and maximise the sale price. If the mortgagor did not maximise the sale price, Mr Liang could make a claim against them. Possession of the rented premises was required to achieve the best price.
The applicant acknowledged that it would be challenging and disruptive for the respondent to move, but argued that the medical evidence did not establish that it was impossible for him to do so, particularly as his children had support systems in place. If the property was sold subject to the rental agreement, that would not provide certainty of housing for the respondent, as a new owner may require possession. The applicant noted the Tribunal's decision in Lynch v Manion (Residential Tenancies) [2021] VCAT 1156, where the member found it would be mentally challenging for the renter to relocate, but did not accept that the renter was unable to move or would be rendered homeless. The Tribunal also found that the rental provider was entitled to realise her asset, and decided to make a possession order.
The respondent's position was that if a possession order was made, he could potentially be rendered homeless, his children may end up in out of home care, and both his and his children's mental health and well-being would suffer.
The respondent is a single father of three children. The oldest child, ZXI, is aged 16 and has an intellectual disability, level 3 (severe) autism and anxiety, accompanied by emotional dysregulation and challenging behaviours. The middle child is aged 15 and has ADHD. The youngest is aged 13 and has level 2 autism.
The respondent submitted a range of medical reports and support letters setting out his extremely challenging family situation.
A letter from Marjan Kelesovski, Darebin Family Services Worker, dated 23 October 2025 noted that the respondent was under immense stress and a referral had been made to The Orange Door family services. Due to the care needs of his children the respondent could not work and was reliant on Centrelink income support. According to the letter, he had no family or friends who were in a position to provide support. Evicting the respondent would place him and the children into homelessness.
In a letter from Trellis, dated 6 October 2025, behaviour support practitioner, Phoebe Wells and psychologist, Dr Saga Arthurson wrote that the oldest child, ZXI, presented with significant behaviours of concern, including verbal and physical aggression, withdrawal from school and refusal of supports and services. Changes in routine, sensory deregulation and emotional stress exacerbated these behaviours. Her future placement in school was unclear because of challenges with school refusal and significant behavioural incidents over the past two years. Her family home was the cornerstone of her current support plan. It was geographically close to essential supports, such as her current school, therapy providers and medical practitioners. Any disruption would likely result in significant regression in ZXI's behavioural and emotional regulation and elevated levels of anxiety and distress. The stress of relocation would also compromise the respondent's ability to maintain his current level of care, potentially resulting in a crisis situation requiring emergency interventions or out of home placements. The risks to ZXI included deterioration in mental health, regression of skills and progress, and loss of access to services.
A further letter from ZXI's school dated 17 September 2025 confirmed that ZXI presented with significant challenges. Changes to her routine, perceiving that demands are being placed on her, or that her needs are not being met, triggered a response of significant emotional dysregulation and/or disengagement. Susan Colaino, Deputy Principal and Peter Augustin, Associate Director, also considered that home was a positive in ZXI's life and that she was able to self-regulate effectively at the end of the school day. If there was a risk of significant disruption to the family's housing security, the family would require a significant period of adjustment.
In addition to that letter, emails were provided from the respondent to the school dated 16 September 2025, stating that ZXI was becoming increasingly dysregulated by the day at home (screaming and throwing items) with the uncertainty around her schooling. On 10 September 2025, the school responded stating that, given the escalation and challenges ZXI had experienced in the previous week, including a physical incident with a staff member, the school required further time to consider options for ZXI's schooling.
A discharge report from Austin Health, Child and Adolescent unit dated 29 April 2025 confirmed that ZXI struggled with changes in her routine and could respond with aggression and disengagement. The report noted that ZXI had a history of hurting herself and others. She had assaulted support workers, teachers and her father. The report also noted that the respondent presented with carer burnout symptoms. There was conflict within the home, with difficult and competing sibling needs. Fighting among the children at home had also resulted in property damage. The report recorded that ZXI's care team included seven care specialists, including a paediatrician, a behavioural support practitioner, a psychologist, a social worker, an occupation therapist, a speech therapist, an NDIS co-ordinator and the school psychologist. ZXI also had an NDIS package in place.
An additional letter (undated) from the paediatrician at Austin, Dr Candie Chang stated that "with the stressors they faced with potential eviction, resulting in a significant change in routine for ZXI, this has resulted in increasing incidences at home where she can be violent to her father. This contributes to ongoing exhaustion and strain in family functioning. Her care team includes multiple therapists and despite this, ZXI's anxiety and outbursts remain high and frequent...optimising ZXI's environment to provide stability is of utmost importance." Dr Chang again recorded that any disruption, in particular having to move, would trigger severe anxiety, behavioural escalation and regression in adaptive functioning for ZXI, whilst the cumulative stress on the respondent would increase the risk of family breakdown.
The respondent gave evidence at the hearing about the challenges he faced as a result of his children's care needs. He said ZXI has NDIS supports but there are no workers. Her previous worker disengaged due to ZXI's challenging behaviours. ZXI has meltdowns when her needs are not met, she screams, falls to the ground and has physically attacked staff at her school. She likes fixed schedules and otherwise becomes anxious.
None of the children attend school full time, with his two daughters only attending a few hours per day. This has affected his ability to look for alternative properties. While he had attended some rental inspections, ZXI had become anxious, asking questions about why they were looking at houses, and on occasion had a melt-down. He could not leave the children home alone while looking at properties due to conflict between them.
Because of these difficulties he had not inspected any accommodation options for some time, but he received daily alerts based on search parameters he had established. However, few of the options within these daily alerts were affordable. He has not applied for any properties because the properties were unsuitable, he had a limited budget, and he had been told he had grounds to successfully contest any possession application.
At present he had to find suitable schooling for ZXI. This was difficult due to incidents that had occurred at her current school. He is exhausted and has nothing more left to give. If required to vacate, this would increase his level of stress and further impact on the children. It is difficult to know where to look for accommodation at present because the children have commitments in disparate locations.
In summary, the respondent submitted that his compelling circumstances warranted dismissal of the application. Housing stability was critical to the family, and the risks had been highlighted by the various practitioners involved in the support of the respondent and his children. The respondent said that the reasonable and proportionate test required the Tribunal to "balance the losses" of the parties. On no view could it be concluded that the interests of the applicant, which was to modestly increase the return on a property sale, outweighed the impact of a possession order on a family with three children diagnosed with disabilities.
[2]
Whether any other order or course of conduct is reasonably available instead of a possession order
[3]
The respondent submitted that in this case there was an alternative course of conduct open to the applicant, namely to sell the premises with the rental agreement in place. The applicant pointed to Danrell v Morris (Residential Tenancies) [2022] VCAT 1303 where the member determined it was not reasonable and proportionate to make a possession order, given that selling the property subject to the rental agreement was a course reasonably available to the rental provider. This conclusion was reached despite evidence that the premises required minor work before sale, that a sale subject to the rental agreement could affect the price and also diminish the pool of prospective buyers.
The respondent further submitted that any obligation the mortgagee owed to Mr Liang under the TLA to maximise the sale price could not override the application of the reasonable and proportionate test under the RTA.
The applicant did not consider it was feasible to sell subject to the rental agreement. The applicant had spoken to a real estate agent who opined that the sale would achieve between $60,000 to $80,000 less if sold subject to the rental agreement. The applicant also noted that the rent under the rental agreement is low, and that selling in those circumstances, and where VCAT had refused possession, would diminish the pool of buyers. Financial institutions would be unwilling to lend to a potential purchaser if the applicant was forced to sell subject to the rental agreement. Such a situation would be a deterrent for lenders.
The applicant also said that the respondent had failed to engage with them following a request for repairs, and that they had concerns that access would be difficult during a sales campaign if the property remained subject to the existing rental agreement.
The respondent however, denied that he had failed to engage. He said he was willing to explore options with the applicant regarding marketing the property, if he remained.
[4]
Any other matters the Tribunal considers to be relevant
[5]
The respondent argued that it was not permissible to take into account the interests of Mr Liang, as he was not a person specified in section 330(1)(f) which refers to the interests of the renter, rental provider, any co-tenants, neighbours or any other person affected by the acts or behaviour of the renter. The respondent also said that records showed $65,000 of the mortgage loan had been repaid, and that if the property realised $700,000 while tenanted, the applicant would still have achieved an 8.7% return on their investment. It was open to them to pursue Mr Liang for anything else owed.
Whilst I agree that Mr Liang's interests are not directly addressed by the terms of section 330(1)(f), I find that his interests are a relevant factor in this case and need to be considered.
The applicant has said that Mr Liang's interests are better served by the making of a possession order, as their enquiries have found that sale with vacant possession will maximise the sale price.
No specific further issues were raised by the parties under section 330A(j), that were not already addressed by the evidence and submissions made in relation to the interests of the parties and the impact of a possession order on them.
[6]
I have firstly considered whether a possible alternative course was available in this case, namely for the applicant to sell the rented premises subject to the rental agreement.
The applicant raised concerns about access issues during a marketing campaign, primarily due to an alleged lack of engagement by the respondent with the applicant following a request for repairs. This evidence was denied by the respondent, who in turn blamed the applicant for their lack of action about requested repairs and his view that their wish for access was for motives other than repair. Whilst making no findings on the specifics of the repair and access issues, what was apparent to me is that there is no co-operative relationship between the parties. Despite the respondent's assertion that he was open to discussing access arrangements with the applicant for the purposes of a successful marketing campaign, the extent to which those negotiations would bear fruit, in light of a poor working relationship between the parties, is doubtful.
The second concern I have is indicated by the medical evidence. ZXI is triggered by any changes in her routines, causing distress, outbursts and sometimes aggression. A sales campaign is challenging for any occupant, and it would be more so for this family and for ZXI. It seems unlikely that the respondent would be able to guarantee access to the home during set times for the purposes of sales inspections, as the evidence shows it would depend on the circumstances of his children on the day. Even school times are short and sometimes disrupted due to incidents at ZXI's school or school refusal, so access during school hours cannot be guaranteed. The medical evidence also raises issues relating to the safety of others, in particular other family members or support workers, if ZXI is triggered by the processes and access requirements that would arise from a sales campaign.
I also accept that, given the low rent payable under the rental agreement currently in place, selling subject to the rental agreement would have a significant impact on the potential pool of buyers in this case. This would in turn impact on the purchase price adversely, in circumstances where the applicant has a statutory obligation to maximise the sale price, and where a third person, who is not a party to this proceeding, would be impacted in a significant way.
Given the above considerations, I am not satisfied that selling subject to the rental agreement is an appropriate or realistic course of action in this particular case.
I have next considered the interests of the parties and the impact of a possession order on them.
I accept that the interests of the applicant are largely monetary, but that a possession order is also required in order to meet its legal obligations to Mr Liang. I accept the applicant's evidence regarding the amounts owed under the loan, and the likely impact on the sale price of selling subject to the rental agreement. No evidence was produced by the respondent to negate that evidence. Further, the Tribunal hears many cases of this nature, and it is commonly understood that selling with vacant possession maximises the potential pool of buyers, the likelihood of a sale, and the sale price.
I accept that the interests of the respondent revolve around maintaining a stable home for himself and his children, in circumstances where he has significant caring responsibilities and where the rented premises have been the family home for many years. I accept that this stability is critical for ZXI in particular and for the family as a whole.
However, I do not accept that the family will be homeless if a possession order is made. The respondent has multiple supports within the community, including a recent referral to The Orange Door and an offer by Darebin Council to refer him to Haven Home Safe. The respondent gave evidence that there was the potential for assistance with alternative affordable accommodation options through these services. It seems very unlikely that, with the level of supports available, the family would be rendered homeless as suggested.
No evidence was presented by either party as to the availability of suitable alternatives on the private rental market. However, I was not satisfied that the respondent had fully explored private rental options. He said he ceased inspecting rented premises because of the difficulties in doing so. I appreciate the challenges inherent in inspecting rental premises given the children's needs, but the respondent has not applied for any properties, even those he did inspect, because of location, price and/or his belief he could successfully defend a possession application. I accept that the rental market across Victoria is difficult, but rental vacancies do vary according to area. The respondent said he receives regular vacancy alerts based on his own search parameters, indicating suitable properties have been available, but the evidence shows that no follow up has occurred for some time. I am therefore not satisfied that there is a lack of suitable alternative options available in the private rental market, for which the respondent could apply.
It has also been submitted that the making of a possession order would result in the children being placed in out of home care. Again, I consider that the family has multiple supports in place to prevent such an outcome.
The greatest concern in this case is clearly impact of a possession order and therefore of a change in housing circumstances on ZXI, the other children and the respondent as their carer, where there is clear evidence of carer burnout. On one hand, if a possession order is not made, the respondent would be able to remain in the premises, his long-term home, for the time being, without the stress of finding alternative accommodation, packing and dealing with the impact that change would have on his children.
On the other hand, although I have found that selling subject to the rental agreement is not a realistic or suitable option in this case, that would inevitably be the result if a possession order was refused. I have concerns that the family will therefore be impacted regardless, due to the challenges and impact of a sales campaign on the occupants. Further, a successful sale does not equate to stability or certainty of housing. A new owner may wish to live in the premises, renovate or demolish for example, or may decide to raise the rent to a level that would be unaffordable for the respondent.
It is therefore evident that a refusal to grant a possession order in this case may only have short-term benefits. A delay in being required to move may be appropriate if the respondent's issues were temporary, but the evidence does not show that to be the case - the challenges associated with care of the children are long-term and ongoing.
Lastly, I consider the interests of Mr Liang are relevant to the outcome of this proceeding. His interests are best served by proceeding with a possession order, in order to maximise the sale price and reduce, as much as possible, his indebtedness to the applicant.
The Tribunal is required to determine whether a possession order is "reasonable and proportionate". The task set by the legislation is for the Tribunal to "consider" each of the required factors, and the position of each of the parties, in order to reach a conclusion on this issue. However, that does not mean that the outcome is determined by which party's likely loss is greater, or which party would be likely to suffer the greatest hardship. If that was the test Parliament could simply have said so. There are many examples of such a test in relation to other application types within the RTA.[5] Rather, the relevant considerations must inform the Tribunal's conclusions as to reasonableness and proportionality.
The Tribunal is required to balance the competing interests of both the rental providers and the renters, and the impact on each of them, in determining whether it is reasonable and proportionate to make a possession order. In this case it requires a consideration of why the rental providers need to sell the rented premises, why they would like to sell with vacant possession, whether there is any other course of action open to enable the sale without making a possession order, the renters' actions in assisting with a sale while in possession, efforts made by the renters to find alternative accommodation and generally the rental market and economic climate.
[8]
I have considered the factors noted by the Court, as well as each of the relevant factors in section 330A, the interests of the parties, and the impact of the possession order as required under section 330(1)(f).
Whilst I appreciate and acknowledge the considerable challenges that the respondent will face in relocating, I have found that, with relevant supports, relocation is possible. A possession order will inevitably impact on the family adversely, but in my view so will the alternative course, involving a sale subject to the tenancy and all the inconvenience and uncertainty that will create. I have balanced those conclusions against the financial interests and legal obligations of the applicant, also taking into account the interests of Mr Liang, and my conclusion that selling subject to the rental agreement is not realistic.
I find that it is reasonable and proportionate to make a possession order in this case.
[9]
I note that the respondent has already had many months to find a suitable alternative for accommodation. Unfortunately, he has not fully investigated private rental options, although he gave evidence at the hearing that he had recently reached out to services that could assist with affordable accommodation.
Despite the respondent's failure to fully pursue alternative accommodation, given the significant caring responsibilities he faces in his daily life, I accept that he requires as much time as possible to relocate. The maximum time available to me under the law is 30 days from the date of this order,[6] therefore I will make a possession order with a vacate date of 20 February 2026. The execution period for the warrant of possession will also be a period of 30 days, which will allow police some flexibility for the respondent, if the applicant chooses to enforce the possession order by purchasing a warrant of possession after the vacate date.
[10]
[1] See Commonwealth Bank of Australia v Shrestha[2024] VSC 229 - an entitlement to possession may arise from the specific terms of the mortgage agreement, as well as by a court order.
[11]
[2] Reference to the legislative history of a statutory provision and to its historical setting can assist in understanding the object of the legislature, or what 'mischief' it intended to address by enacting the relevant provisions. However, the primary source of guidance as to the legislative intention must remain the text of the legislation itself. In my view the text in section 91ZZK and section 5 make the outcome described in paragraph 25 clear.
Capital Securities Mortgages Pty Ltd v NAA (Residential Tenancies) [2026] VCAT 40 (21 January 2026)
Section 91ZZK operates in a set of narrow circumstances. As noted in Capital Securities XVI Pty Ltd v Kozina & Anor[2023] VSC 178 at paragraph 74, the section is permissive. The Court rejected the contention that section 91ZZK prescribed a mandatory requirement on a mortgagee to give a 60-day notice to vacate to a renter, where the mortgagee finds at any time, a renter in occupation of mortgaged premises under a rental agreement.
The Court further noted the limited circumstances to which section 91ZZK can apply. Firstly, the mortgage must be entered into before the rental agreement. Secondly, the mortgagee must either become entitled to possession of, or to exercise a power of sale in respect of, the relevant premises. Thirdly, the mortgagee must not have consented to the rental agreement either expressly or by implication. If those conditions are met, the mortgagee may give the renter a notice to vacate under section 91ZZK.
Relevantly, section 91ZZK does not require the mortgagee to be in possession, only to "become entitled to possession". Thus, a mortgagee can issue a notice to vacate to a respondent upon a loan default on the part of the mortgagor entitling the mortgagee to exercise a right of possession, without the mortgagee first having to obtain an order of possession from a court.[1]
However, as noted, section 91ZZK does not apply if (a) the mortgage was entered into after the rental agreement, or (b) the mortgagor has given implied or express consent to the mortgagor entering into the rental agreement, regardless of when the mortgage was entered into. What rights does the mortgagee then have as against the renter? Is it the case, as submitted by the respondent, that a mortgagee is unable to exercise any rights under the RTA? The respondent argues that the rights of the mortgagor as rental provider cannot be transferred by operation of law. It is further argued that to do so would render section 91ZZK nugatory. However, I do not consider that these contentions are correct.
In my view, the effect of the legislative scheme is as follows:
A mortgagee who becomes entitled to possession due to a loan default by a mortgagor may give a notice to vacate to a renter under section 91ZZK where (a) the mortgage was entered into before the rental agreement, and (b) the mortgagee has not given implied or express consent to the mortgagor entering into the rental agreement. A notice to vacate under section 91ZZK is effective, regardless of any rental agreement being in place, fixed term or otherwise. Such a notice can include a termination date that precedes the end date of any fixed term agreement.
A mortgagee who otherwise wishes to take possession of rented premises, that is, where (a) the mortgage was entered into after a rental agreement or (b) where the mortgage has given consent to the rental agreement being entered into, can acquire rights under section 5 of the RTA and assume the same obligations and entitlements as the mortgagor formerly had under the rental agreement - once those rights have passed by operation of law. A notice to vacate given under these circumstances must comply with the requirements that are applicable to a rental provider. For example, the mortgagee, as the substituted rental provider would not be able to give the renter a notice to vacate for sale of the premises with a termination date that preceded the end of any fixed term agreement.
This view is consistent[2] with the Consultation and Options paper available on Engage Victoria's 'Fairer Safer Housing' website, a document related to the Victorian Government's review of the RTA, which lead to the RTA being amended.[3] Under the heading 'Reforms' the review document includes:
The effect of section 78 of the TLA is that the mortgagee may enter into possession (as against the owner of the property) by way of receipt of rents and profits. The applicant argued that it asserted possession in this case by virtue of the letter sent to the respondent on 30 April 2025 directing him to pay rent to the applicant.
In Shire of Katanning v Bride (No 2)[2011] WASC 248; 183 LGERA 201 at [31], Allanson J noted that "a mortgagee can be in possession if...although not in physical possession, is collecting rents and profits in a way that effectively deprives the mortgagor of the control and management of the property." In Thompson v Geminder Holdings Pty Ltd[2016] VSC 495 at [471], Ginnane J stated that a 'notice of redirection of rent would appear to involve an adoption of the lease' even though the mortgagee in that case had not consented to the lease in question.
I accept the applicant's contention that by virtue of the letter dated 30 April 2025, the mortgagor adopted the rental agreement. As the applicant was in possession as against Mr Liang and had directed payment of rent, they stood in the shoes of the rental provider.
As at the date of the notice to vacate, 14 May 2025, pursuant to section 5 of the RTA, the rights and obligations of the rental provider had passed to the applicant by operation of law. As a consequence, they were entitled to issue the notice to vacate to the renter under section 91ZZB of the RTA.
Although not accepted by the respondent at the hearing, the respondent's conduct was also consistent with this view, as he directed rent payments and requests for repair to the mortgagee following the letter of 30 April 2025.
The respondent noted that the effect of clause 16 in the exclusive auction authority was to end the authority in June 2025, before the termination date of 21 July 2025 in the notice to vacate. The respondent argued that, as a consequence, the documentary evidence did not show the property would be sold or offered for sale with vacant possession immediately after the termination date of 21 July 2025. The respondent submitted that the notice to vacate was therefore invalid because the documentary evidence did not provide the proof required to support the reason for giving the notice - namely, proof of sale with vacant possession immediately after the termination date.
The applicant relied upon the VCAT decision of Kao v Mazi (Residential Tenancies) [2024] VCAT 1179, where the renter asserted that a section 91ZZB notice to vacate was invalid because, amongst other things, the relevant sales authority had expired on 20 August 2024, days before the termination date of 28 August 2024 in the relevant notice to vacate. The VCAT member rejected this argument stating that:
The purpose of the mandatory documents is to ensure that a rental provider attaches relevant evidence to a notice to vacate to support the reasons why the renter is being required to vacate. It falls to the Director to determine what that evidence should be. The Director has required only a contract of engagement/authority to sell with a licensed estate agent be supplied with the notice to vacate, without specifying any additional specific requirements in relation to that document.
I note that the comments of the VCAT member in Kao v Mazi were cited with approval by Finanzio J in Mazi v Kao (No 3) (Notice to Vacate)[2025] VSC 630. His Honour commented that a sales authority is not a statutory document, but evidence supporting the rental provider's reason for seeking possession. If a sales authority specified a period of zero days that might be invalid because it would render the sales authority of no effect. However, His Honour otherwise regarded the length of the sales authority period as having "a bearing on whether the reason provided for the notice is the real reason, as opposed to contrivance" - that is, the length of the authority period was not a matter that went to the validity of the notice, but to whether the rental provider was able to prove a genuine intention to sell after the termination date.
I find that the notice to vacate is not invalidated by the fact that the auction authority period ended before the termination date on the notice to vacate. As the notice meets all of the requirements in section 91ZZO it is a valid notice.
I also find that the notice to vacate was given to the respondent in compliance with section 506 of the RTA. Section 506 specifies that a notice to vacate can be delivered personally to a renter. An Affidavit of Service sworn by Reginald Stone, dated 16 May 2025, showed that the notice to vacate and the exclusive auction authority were given personally to the respondent on 16 May 2025, which the respondent subsequently acknowledged in an email dated 19 May 2025. Further, the termination date on the notice to vacate was 21 July 2025 which was at least 60 days after the date the notice to vacate was given, as required by of the RTA.