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Short-stay apartments case gets legal

27 Mar 2012

Hopes for an early resolution to the stand-off between residents and serviced apartment operators were dashed in Docklands on March 22 when the Building Appeals Board opted for a six-month adjournment.

The Building Appeals Board in Aurora Lane, Docklands, is the unlikely forum for resolution of a bitter Australia-wide dispute over the use of residential apartments for short-term accommodation.

As a test case, the City of Melbourne is using the Building Code of Australia (BCA) in an attempt to wipe out the practice, which is widespread in parts of Docklands – particularly NewQuay.

More used to hearing simple matters of dispute relating to the BCA, the board found itself having to rent a conference room in the adjacent Travelodge Hotel to house the large numbers interested in the case.

Board chairman Leslie Schwarz expressed surprise at the level of interest in the case and probed barristers representing both the council and an appealing serviced apartment operator about the context of the matter.

The City of Melbourne last year issued notices to 26 owners operating serviced apartments in the Watergate residential tower in Docklands. The board heard that 80 of the block’s 400 apartments are being used for short-stay accommodation.

The council is using a building code definition to claim that such use is illegal.  It is alleging that owners need to have “Class 3” permission (usually reserved for hotels and rooming houses) to operate serviced apartments – an issue which the apartment operators contest.  

It is widely accepted that if owners were forced to comply with Class 3 requirements, the use of serviced apartments in residential buildings would become commercially unviable.

While it is understood that all of the owners have appealed the council orders, the case before Mr Schwarz concerned only one case – that of Paul Salter and Belinda Balcombe’s business, Docklands Executive Apartments.

Mr Salter’s barrister Rebecca Brezzi said there was no dispute that the apartments were being used for short-term accommodation and she contended that the matter could be simply resolved by the board making an interpretation on which class should apply to serviced apartments.

She said Mr Salter disputed that renting apartments for less than 30 days was in breach of Watergate’s Class 2 designation, as alleged by the council.

She suggested that the single case be used as a test case so the matter could be cleared up.

The council’s lawyer, Trevor Wallwork, however said there was more to the case and did not accept her challenge. Mr Wallwork said the “commerciality” of the arrangement was also relevant and the less-than-30-day aspect of the leasing was only one of many considerations.

Ms Brezzi produced a Building Appeals Board 2007 precedent case from Geelong to support her contention that serviced-apartment use should not be considered Class 3 on the basis of the “relationship” between the tenants renting short-term serviced apartments.

Mr Wallwork admitted that he was not familiar with the case and Ms Brezzi provided him and Mr Schwarz with a copy.

Mr Schwarz said that it would be dangerous to consider the matter in isolation from the “total picture”.  He set aside four, non-consecutive half-days for a hearing to held in at least six months time.

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