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Leave to appeal granted in AirBnB matter

10 June 2016

In the matter of Swan v Uecker [2016] VSC 313, Justice Croft today granted leave to appeal the Victorian Civil and Administrative Tribunal’s decision, subsequently ruling the appeal to be successful in his judgment.

The Applicant, Catherine Swan, owns a two bedroom apartment in Fitzroy Street, St Kilda (“the Apartment”). In August 2015, she leased the Apartment to the Respondents, Uecker and Greaves, pursuant to a residential tenancy agreement for a term from 20 August 2015 to 19 August 2016 (“the Lease”).

The Applicant sought an order for possession in the Victorian Civil and Administrative Tribunal (the Tribunal) on the basis that the Respondents had sublet the Apartment in breach of the provisions of the Lease. The Applicant’s case was that the Respondents granted leases to third parties (“AirBnB guests”) who stayed in the Apartment. The Respondents conceded before the Tribunal that AirBnB guests stayed at the apartment for short term stays, booked through the AirBnB website.

VCAT dismissed the application on the basis that the Respondents had granted licences only to the AirBnB guests, but not leases. Consequently, the Tribunal found that they had not sublet the Apartment.

“As you will see from the reasons that have just been published, I am of the view that leave to appeal should be granted and that the appeal is successful.

As my reasons show, I am of the opinion that the particular AirBnB Agreement in issue in this appeal, for occupation of the whole of the Apartment, constitutes a lease between the Respondents, being the tenants, and the AirBnB guests, for the period of occupation agreed between them. It follows, having regard to the Respondents’ own tenancy, that by entering into the AirBnB Agreement, they were sub-letting the Apartment.

Consequently, the Respondents are in breach of the provisions of their lease of the Apartment with the Applicant. Specifically, the Respondents are in breach of clause 54 of the “Additional Terms” which does not permit sub-letting without the written authorisation from the landlord, or the landlord’s agent.

As I indicated at the conclusion of the hearing of this appeal, I am aware that this case has generated some interest in the media and among the general public. In light of this welcome interest in the proceedings of the Court, I wish to reiterate the following matters.

First, this case was not about the merits of AirBnB arrangements. Neither was this case about whether or not AirBnB arrangements might be said to be “illegal”—either in some particular or in some general, non-legal, sense. Rather this was a case, on appeal, which raised for determination whether a particular AirBnB arrangement constituted a lease of the Apartment or just a licence to occupy it. I have found that this particular AirBnB arrangement constituted a lease of the Apartment.

Secondly, the context provided by the terms of the particular apartment lease are important. Although this apartment lease is a residential lease, many commercial leases restrict the tenant from sub-leasing, assigning the lease, granting any licence to occupy all or part of the leased premises or otherwise parting with possession without the landlord’s prior consent. Broad terms such as this would prevent, for example, sub-letting or licensing without the landlord’s consent and would avoid the need—as in the present case—to characterise the nature of some arrangement like the AirBnB arrangement for occupation of the whole of the leased premises as a sub-lease or a licence.”

Justice Croft, Notes for Judgment, Catherine Swan v Barbara Uecker and Michael Greaves, [2016] VSC 313, 10 June 2016

This statement is not intended to be a substitute for the reasons of the Supreme Court of Victoria or to be used in any later consideration of the Court’s reasons.

Read the full judgment on Austlii (External link) 

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