VCAT decision on Watergate short-stay apartments is imminent

Owners’ Corporations (OCs) and short-stay operators around Victoria are awaiting the outcome of the Watergate Victorian Civil and Administrative Tribunal (VCAT) case.

Lawyers representing the Watergate OC and Docklands Executive Apartments operator Paul Salter on May 20 made their closing submissions to VCAT member Linda Rowland.

Earlier this year the OC took VCAT action against nine lot owners, alleging breaches of multiple OC rules through the use of their apartments as short-stay accommodation as part of Mr Salter’s business.

Mr Salter has represented all nine owners at VCAT.

The VCAT case centred on whether the owners’ corporation had the right to make rules preventing lot owners from leasing properties for less than 30 days and using apartment for commercial purposes.

Lawyer for Mr Salter, David Fairweather, contended the rules were invalid, because they were discriminatory and contradicted rights given to lot owners in other legislation.

However, lawyer for the Watergate OC Tim Margetts refuted this saying the rules treated all lot owners the same and was valid under the Owners’ Corporation Act.

Tensions between the lawyers boiled over at the final VCAT hearing on May 20.

Both Mr Fairweather and Mr Margetts have been involved in the short-stay matter since its origins at the Building Appeals Board (BAB), with Mr Margetts originally representing the City of Melbourne.

VCAT is the third tribunal or court to deal with the issue of short-stays in the Watergate building, with a matter between Mr Salter and the City of Melbourne having previously been heard at the BAB, the Supreme Court and the Court of Appeals.

At last month’s VCAT hearing Mr Margetts accused Mr Fairweather of “conducting himself in a most undignified manner.”

Mr Fairweather responded by asking Mr Margetts to refrain from making personal comments and referred to an earlier Supreme Court hearing where he said Mr Margetts had accused him of being inexperienced.

Earlier in the hearing Mr Fairweather had accused Mr Margetts of misleading the tribunal in relation to legislation.

In making his closing submission, Mr Fairweather told the tribunal that there was no evidence that short-term letting was of a hazardous nature that required a notification to the OC of a change of use.

He said unfair discrimination applied in this case because the OC was asking the tribunal to imagine parties and drug-dealing at the building and  “obscurus” behaviour of short-term tenants.

“There is no empirical evidence to suggest people who dwell short-term are bad or problematic people,” Mr Fairweather said.

However, Member Rowland questioned this approach and said the OC was allowed to discriminate against potential applicants.

Mr Fairweather also said the OC rule restricting short-term leasing was invalid because it impeded rights given to lot owners in other legislation including the Docklands Planning Scheme, the Planning and Environment Act and the Transfer of Land Act.

Mr Fairweather said the apartments in question had Class 2 permits and those permits remained unless there was a change in use.

He said short-term dwelling did not offend the Class 2 classification and it was an error of law to import a length of stay into the definition.

“What we have here is something being dressed up as a legitimate rule in order to oust a legitimate use of these apartments,” Mr Fairweather said.

However, in his closing submission, Mr Margetts said a “fundamental misconception” had permeated throughout Mr Fairweather’s submission.

Mr Margetts said assertions that the rules were inconsistent with the planning scheme and building code were incorrect, because the rules did not prevent short-term occupation.

“What it prevents is the owner lending the lot on a short-term basis, this rule in no way restricts occupation of a short-term nature,” Mr Margetts said.

He gave the example of apartment owners inviting friends or family to stay with them or in their apartment on a short-term basis.

“It is only a breach when, as the rule requires, it allows occupation as part of a commercial enterprise on an ongoing nature,” he said.

Mr Margetts also maintained that the OC rules represented a “vested right” for all lot owners.

“The OC can stop the letting of an apartment if it is being used as a business. This is not inconsistent with the (OC) Act,” Mr Margetts said.

At the conclusion of the hearing Member Rowlands said she understood both arguments but that her decision would be made in accordance with the law.

Member Rowlands is expected to release her decision in June or July.