When Is a Sale-Based Possession Order “Reasonable and Proportionate”?
Sathiyamoorthy v Gomez (Residential Tenancies) [2025] VCAT 938
Decision date: 20 October 2025
Key issue: Whether it was reasonable and proportionate under s 330A of the Residential Tenancies Act 1997 (Vic) to make a possession order following a valid sale NTV, in light of rent being withheld, the parties’ hostile relationship, and competing hardship arguments.
Full Case: https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/vic/VCAT/2025/938.html
The Background
The Hoppers Crossing property had been rented by the Gomez family since October 2023. The rental provider, Mary Sathiyamoorthy, served a s 91ZZB(1) notice to vacate on the ground that she intended to sell with vacant possession.
The Notice and Grounds
VCAT found the notice formally valid: it was properly served, gave 60 days, and included a signed exclusive sale authority. The Tribunal accepted that Ms Sathiyamoorthy genuinely intended to sell; it rejected the renters’ claims that the notice was retaliatory or given for ulterior motives. A lack of early marketing didn’t defeat the notice—many owners wait to market until the premises are vacant.
The Reasonable & Proportionate Assessment (s 330A)
The Tribunal then applied s 330A, considering whether granting possession was reasonable and proportionate having regard to the circumstances. It identified five central issues.
Issue 1 – Credit of the renter
The RRP’s attempt to use unrelated Federal Court judgments against Ms Gomez backfired. VCAT held that earlier judicial comments in unrelated commercial cases were irrelevant. While Ms Gomez’s evidence was inconsistent on some details (such as future housing and rent payment), no adverse credit finding was made. The decision turned on other factors.
Issue 2 – Financial gain motive
The Renters argued that any wish by Ms Sathiyamoorthy to maximise the sale price by selling with vacant possession should not influence the Tribunal’s decision. The Member agreed that, in principle, a RRP’s pursuit of financial gain should not determine whether possession is granted.
However, Ms Sathiyamoorthy neither gave evidence nor made submissions that her motive was to achieve a higher sale price, nor was there evidence that selling with vacant possession would, in fact, deliver one. Her reasons for seeking vacant possession were of a different nature, addressed later in these reasons. Accordingly, while the Member accepted the Renters’ statement of principle, it was not decisive in this case.
Issue 3 – Presenting the property for sale
This became pivotal. The renters had historically refused photos during inspections, and communications between the parties were “hostile and accusatory.” Even though inspection reports once called the home “well-maintained,” the Tribunal doubted a cooperative sale campaign was possible. Member Tanner concluded that “any attempt to sell the property with the renters in possession would be extremely difficult.”
Issue 4 – Availability of alternative housing
Evidence about the renters’ next move was conflicting. Ms Gomez initially said a family home under construction would be ready by August or September 2025; later she said it was her son’s house only. VCAT found they hadn’t proven they had no alternatives and hadn’t shown any attempts to find other rentals. Any “tarnished rental record” flowed from their own arrears.
Issue 5 – Withholding rent
This was decisive. The renters had stopped paying rent, claiming a right to “hold back” rent equal to expected compensation. VCAT reminded them that rent cannot be withheld pending other claims—Anderson v Sharpe makes that clear. The arrears, and the renters’ defiance despite being told otherwise, cast doubt on the tenancy’s ongoing viability, an essential factor in proportionality.
Balancing the s 330A Factors
After weighing these issues, VCAT found:
Selling with renters in place was not viable given the animosity and lack of cooperation.
Non-payment of rent and escalating arrears made continuation of the tenancy untenable.
Some alternative accommodation (the son’s new home) was reasonably available.
Although the RRP ’s conduct wasn’t flawless, it didn’t outweigh the other factors.
“The decision is not a comparison of relative hardship,” the Member stressed, “but an evaluation of what is reasonable and proportionate in all the circumstances.”
Outcome
A possession order issued, requiring the renters to vacate by 7 September 2025. The Tribunal held that the order was reasonable and proportionate under s 330A.
Practical Takeaways for Property Managers
Reasonable & proportionate is a structured test, not a hardship race.
Rent withholding is never lawful pending compensation—VCAT will treat it as undermining bona fides.
Relationship breakdown can tip the balance: if cooperation for marketing or inspections is unrealistic, “sell with tenants in place” isn’t a feasible alternative.
Marketing delay ≠ lack of intention if an exclusive sale authority exists.
Tribunal focus: viability of the tenancy, practicality of alternatives, and evidence of genuine sale.
