Melbourne Airbnb tenants in Supreme Court

Melbourne tenants are defending their right to list their rented apartment on Airbnb in the Victorian Supreme Court.

Catherine Swan tried to kick tenants out of her St Kilda apartment after they listed it as available on the popular short-stay website.

But when Barbara Uecker and Michael Greaves wouldn't get out, Ms Swan went to the Victorian Civil and Administrative Tribunal, who ruled in her tenants' favour.

VCAT found Airbnb listings for a room or the entire apartment were covered as a licence, rather than a lease, and guests didn't have exclusive possession of the property.

Ms Swan has appealed in the Supreme Court, where her lawyer Jason Pizer QC argued listing an entire apartment was effectively leasing it.

Mr Pizer said VCAT relied too heavily on the ability of the tenants to access the property during an Airbnb stay, and their ability to make them leave.

"That, we say, was an error of law," Mr Pizer told the court on Thursday.

Ms Uecker and Ms Greaves' lawyer, Warren Smith, said Mr Pizer was engaged in an "overly pernickety" reading of the Tribunal's reasons.

"I'm asking the court to take into account the surrounding circumstances, to divine what was the true intention (of the listing)," Mr Smith said.

Both sides agreed listing a single room of a rented apartment on Airbnb was covered by a licence.

Justice Clyde Croft warned against using the appeal as some sort of test case for the legality of Airbnb in Victoria.

"This is not a case on the merits of Airbnb arrangements," Justice Croft said.

"Neither is it a case on whether or not Airbnb arrangements might be said to be illegal."

Justice Croft said the appeal was about the particular circumstances of the lease.

He said many commercial leases restricted tenants from sub-leasing or granting any licence to occupy the premises.

"Broad terms such as this would prevent, for example, sub-letting or licensing without the landlord's consent," he said.

The couple's lease expires in August.

Justice Croft will hand down his decision on the appeal next week.