A landlord who attempted to evict tenants for listing their rental property on Airbnb has taken the case to court, arguing that a five-day stay in the apartment in Melbourne amounted to sub-letting.

Barbara Uecker and Michael Greaves signed a 12-month lease for the two-bedroom apartment in the bayside suburb of St Kilda in August 2015 and later listed it on Airbnb in two advertisements: one offering just the spare room, and one the whole flat.



They refused to leave when their landlord, Catherine Swan, attempted to evict them in January. Swan referred the matter to a state tribunal, arguing that the pair had violated the conditions of their lease by unlawfully subletting the property.

The Victorian Civil and Administrative Tribunal, in a decision handed down in March, found in favour of the tenants, ruling that the Airbnb guests could not be said to have exclusive possession of the property and therefore the legal agreement entered into by tenants and guests was a licence, not a lease.

Swan appealed against the decision in the Victorian supreme court, and on Thursday her counsel, Jason Pizer QC, argued that the tribunal had “failed to do its job properly”.

The legal debate centred on three occasions when Airbnb guests paid for use of the whole flat in Fitzroy Street, when Uecker and Greaves were away. The longest of those stays was five days.

The other arrangement of having guests in the spare bedroom while the tenants remained in the flat was not an issue.

Pizer said the tribunal had inferred that the Airbnb guests did not have exclusive possession of the flat for the duration of their stay because of a clause in the Airbnb agreement that said the host could kick them out if they overstayed their visit, and because it remained the tenants’ principal place of residence.

It then found that because they did not have exclusive possession, and because the Airbnb agreement referred to itself as a “licence”, the arrangement should be legally characterised as a licence and not a lease and was therefore not in violation of the subletting clause in the original property lease.

But Pizer said the factors considered by the tribunal did not amount to exclusive possession, and that the tribunal “either identified the wrong legal test for exclusive possession or applied the right test wrongly”.

Warren Smith, the counsel for Uecker and Greaves, said the expectation of Airbnb users was that it would operate like a hotel booking, not a sublet, so it should be legally characterised as a licence and not a lease.

Judge Clyde Croft played down the significance of the case in a statement directed at the media, and said the case would not determine whether Airbnb was legal or illegal in Victoria.

But it was likely to determine whether landlords took action against tenants for listing their home on the website.

Croft was expected to hand down his decision next week.

The Victorian government has promised to introduce a new three-strikes rule to crack down on landlords letting their properties for short-term stays on Airbnb, which the state’s consumer affairs minister, Jane Garrett, said was creating “perpetual party apartments”.

But the proposed regulation does not go into arrangements between landlords and tenants, when the tenant is the one offering the property on Airbnb.

Michael Buxton, from RMIT university in Melbourne, said social problems caused by short-stay guests in residential apartment buildings was a bigger concern than subletting arrangements, but said both should be addressed through better regulation.

Genadi Kazakevitch, an economist at Monash University, likened the legal protests against disruptive services such as Airbnb and Uber to ordering a man with a red flag to walk in front of early automobiles.

“Any new thing should cause concern, it should cause people to protest – just think of the automobile,” he said. “That is the response to disruptive technologies.”

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