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Serviced apartment battle to continue

04 Apr 2013

Serviced apartment battle to continue Image

By Bethany Williams

The serviced apartment dispute that has divided Docklands will continue on to the Supreme Court.

The Building Appeals Board (BAB) last month dismissed Docklands Executive Apartments’ (DEA) appeal against a building order issued by the City of Melbourne in 2011.

But the serviced apartment community has rallied around DEA operator Paul Salter and will launch a Supreme Court action.

Around 50 operators from Melbourne and beyond attended a meeting arranged by industry group VicShortStay in NewQuay last month and agreed to continue the fight.

By Easter the group had raised more than 65 per cent of the $200,000 needed to fund the court action.

It has appointed legal counsel but, as Docklands News went to print, had not lodged its case with the Supreme Court.

The move follows the release of the BAB’s determination on March 22, which affirmed the decision of council to issue building orders against owners of serviced apartments in the Watergate building.

The Watergate building is a Class 2 residential building according to the Building Code of Australia (BCA), but council has argued that serviced apartments fall within the Class 3 classification, usually reserved for hotels and rooming houses.

The building orders issued by council in 2011 ordered Watergate serviced apartment owners to comply with building regulations applicable to Class 3 buildings or to cease trading.

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

Yezz Pty Ltd, which operated as Grand Harbour Accommodation, and DEA appealed the building orders at the BAB.

The Watergate Owners Corporation also joined the case in support of council.

Yezz Pty Ltd withdrew from the case in November last year and has ceased operations at Watergate.

The determination issued by the BAB last month was based on the interpretation of the BCA and specifically the term “dwelling”.

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

During the BAB hearings Mr Salter’s lawyer Richard Niall said the term dwelling did not impose a qualification of time and therefore could include serviced apartments.

But council’s lawyer Tim Margetts said it had a condition of continual or habitual use.

In making its decision the BAB panel considered the definitions of Class 1, 2 and 3 buildings, the definitions of dwelling provided in past legislation and regulations and dictionary definitions of dwelling.

According to the determination, the panel formed the view that the term “dwelling”, as it is used in the Class 2 definition, did not only refer to physical characteristics required by building codes but also to a sense of connection by the occupants.

The panel found that the operation of serviced apartments in the Watergate building was not a use permitted under the existing occupancy permit for Class 2 and constituted a change of use.

The panel agreed that council’s municipal building surveyor was correct in classifying the subject apartments as Class 3 due to the apartments use for short-term stays and, therefore, dismissed the appeal.

Watergate Owners Corporation chairperson Barbara Francis, who gave evidence during the hearings, said she was delighted and relieved at the outcome.

Watergate building manager Marshall Delves, who also gave evidence at the hearings, agreed and said the decision was a credit to everyone at Watergate.

“It’s the hard work of the Watergate staff and Owner’s Corporation committee that started two years ago that has brought about this result,” Mr Delves said.

Mr Delves said Watergate had opened it up for all other buildings in Melbourne to see what could be achieved.

Former Arkley Owners Corporation chairman and committee member Roger Gardner said the verdict was a big step forward in combating the problems relating to serviced apartment in Docklands and that the decision had wide ramifications.

Serviced apartments in Docklands could be under threat if the Supreme Court action is unsuccessful as it could pave the way for council to issue building orders against other serviced apartment owners.

Docklands Private Collection of Apartments operator Peter Kelly said NewQuay would struggle without serviced apartments.

Apart from the affect on Docklands’ tourism trade, Mr Kelly said the demise of serviced apartments would also have implications.

“I can’t comprehend people who live here who don’t understand what 400 serviced apartments coming on to the market will do to apartment values,” Mr Kelly said.

The outcome of the case could also have implications throughout Melbourne and Australia because it pertains to a national building code.

“I can’t comprehend people who live here who don’t understand what 400 serviced apartments coming on to the market will do to apartment values,” Mr Kelly said.

The outcome of the case could also have implications throughout Melbourne and Australia because it pertains to a national building code.

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