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Landmark short-stay decision

04 Aug 2016

A landmark Supreme Court decision has paved the way for short-stay accommodation across the state.

Supreme Court Justice Peter Riordan last month ruled that the Watergate Owners’ Corporation (OC) did not have the power to make rules banning owners from leasing apartments to short-term visitors.

The Docklands-based building has been involved in ongoing legal battles over the issues of short-stay apartments since 2012 and the case was being closely watched across Victoria and nationally.

The most recent decision followed the OC’s appeal of a 2015 Victorian Civil and Administrative Tribunal (VCAT) decision, which similarly found that the OC did not have the power to make rules prohibiting short-stays.

Watergate OC chairperson Barbara Francis said it was too early to say whether the OC would appeal the Supreme Court decision.

“We’ll review the decision and canvass the support of the hotel accommodation industry before coming to a final decision,” Ms Francis said.

In his published decision, Justice Riordan said that under the Subdivision Act 1988 and the Owners Corporation Act 2006, the Parliament did not demonstrate an intention to give OCs the power to make rules prohibiting short-term letting of apartments.

According to Justice Riordan, the legislation does not reveal any intention for OCs to be able to “substantially interfere” with lot owners’ proprietary rights or to give OCs the power to overrule uses permitted under planning legislation.

Justice Riordan found that a parliamentary intention to give OCs the power to “substantially inhibit” the conduct of owners on their own property would need to be expressed “in clear and unambiguous language”.

According to local lobby group We Live Here, this finding gives clear direction to the State Government.

Ms Francis, who is also a director of the We Live Here advocacy group, called on the government to change the laws “before it is too late”.

“At last the State Government has now been provided with definitive guidance by the Supreme Court about what it needs to do in order to protect owners, residents and the hotel industry,” Ms Francis said.

Watergate building manager and fellow We Live Here director Marshall Delves said the short-stay accommodation industry was “out of control” in Melbourne.

“Unless the government acts now, we’ll see less and less owner-occupiers and long-term residents in apartment buildings,” Mr Delves said.

Mr Delves warned that apartments buildings in the CBD and inner suburbs would eventually be made up entirely of students and short-stay accommodation providers.

“The heart and soul of these suburbs will be lost and the economy will suffer,” he said.

However, the short-stay operator at the centre of the legal battle says Victorian Supreme Court decision was “absolutely correct” and “upheld the proprietary rights of property ownership”.

Legal victor and Docklands Executive Apartments’ business owner Paul Salter said: “An owners’ corporation is responsible for looking after the common property, not telling you or me what we can do inside our own property,” Mr Salter said.

Mr Salter operates 14 units in the Watergate building as short-stay apartments.

“We as owners will now be actively seeking answers as to how much the OC committee has spent in legal fees and, more importantly, has the committee communicated the loss in the Supreme Court and outlined the costs to the owners.”

“On a number of occasions I have requested an alternative to litigation and, on each occasion, have been refused. I again urge the committee to start a working relationship with me and make Watergate a model of how short-term and residents can co-exist peacefully.”

The Watergate short-stay saga has appeared in a range of courts and tribunals since the legality of short-stays was first tested at the Building Appeals Board (BAB) in 2012, when the City of Melbourne issued building orders against Mr Salter and another short-stay operator in the Watergate building.

The case between council and the operators wrapped up in 2014 after two BAB hearings and a Supreme Court and a Court of Appeals hearing, with the council ultimately failing to curb short-stays in the building.

Since then, the Watergate OC has taken its own action against short-stays in VCAT, leading to the recent Supreme Court appeal decision.

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