Decision time on serviced apartments

By Bethany Williams

A resolution to the serviced apartment case that has divided Docklands is now in sight, with a Building Appeals Board (BAB) decision imminent.

The case, involving the City of Melbourne, Watergate Owners’ Corporation (OC) and Docklands Executive Apartments, was being heard by the BAB in Docklands.

Last year, the City of Melbourne issued building orders against 30 owners who were using Watergate apartments for short-stay accommodation ordering them to comply with building regulations applicable to a hotel or to cease trading.

Yezz Pty Ltd, which operated as Grand Harbour Accommodation and Paul Salter, who operates Docklands Executive Apartments, had appealed the building orders at the BAB.

Last month Yezz Pty Ltd withdrew from the case and has ceased operations at Watergate.

On November 14 the Building Appeals Board heard the final submissions from the remaining parties.

The outcome of the case rests on the way that the BAB interprets the Building Code of Australia (BCA).

Council has argued that serviced apartments should be classified as Class 3, a classification usually reserved for hotels or rooming houses.

It is widely accepted that the cost of converting a serviced apartment to comply with Class 3 regulations would make operating serviced apartments commercially unviable.

Mr Salter’s legal team has argued that serviced apartments fit the definition of a Class 2 building.

Mr Salter’s lawyer, Richard Niall, said serviced apartments were consistent with this classification and that short-stay apartments met the requirements because they had a kitchen, laundry and bathroom.

The BCA defines Class 2 as “a building containing two or more sole-occupancy units, each being a separate dwelling”.

Mr Niall said the word “dwelling” meant a place of residence or abode and that in the context of Class 2 was most likely describing apartments.

He said the use of the word dwelling did not impose a qualification of time.

However the council’s lawyer Tim Margetts said the term dwelling had a condition of continual or habitual use.

He referred to the BCA definition of Class 3, which states that a Class 3 building is “a residential building other than a Class 1 or 2 building, which is a common place of long-term or transient living for a number of unrelated persons”.

Mr Margetts said this indicated that the duration of stay was a factor in building classification and that a building used for transient living was closer to Class 3 than 2.

He said that a building surveyor was required to classify a building as to what it most closely resembled and that serviced apartments most closely resembled a hotel or motel and therefore should be Class 3.

Mr Margetts said serviced apartments resembled hotels because apartments were rented through a licence to occupy rather than a lease; there were hotel-like services provided such as check-in and assistance with luggage and that apartments were available on a daily rate.

He also referred to evidence given by Watergate building manager Marshall Delves and Watergate OC chairperson Barbara Francis about the “interesting behavioural characteristics” of short-term residents.

However, Mr Niall said the question of classification related to whether the apartments are designed, constructed and adapted for use as a Class 2 building and that the classification was of the built environment not of behaviour.

Mr Niall said that there was no evidence to suggest behaviour was a factor taken into account when classifying as Class 2 or 3.

He said the behaviour of occupants in one building could not influence a national classification.

From the outset the case has been a battle of political versus commercial.

The political side, the council and owners, has focused on building classifications in terms of behaviour.

The commercial side, Docklands Executive Apartments, has focused on defining the classifications in terms of building structure.

The outcome of the case is likely to change the face of Docklands.

If the BAB decides that Watergate serviced apartments should be classified as Class 3, it is likely to wipe out the practice of serviced apartments throughout Docklands.

However, if the BAB was to return the decision that Watergate serviced apartments are Class 2 it would pave the way for serviced apartments throughout Docklands.

The case is also likely to have a national effect considering the building code is used Australia-wide.

Whatever their allegiance, Docklanders await the outcome of the case, which is likely to be returned in mid-December or early next year.