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August 09 Edition Cover

VCAT hears Watergate case

28 Apr 2015

VCAT hears Watergate case Image

The Watergate short-stay saga continued last month at the Victorian Civil and Administrative Tribunal (VCAT).

A decision is yet to be made, with lawyers representing both the Watergate owners’ corporation (OC) and short-stay operator Paul Salter to make their closing submissions at a VCAT hearing next month.

While the Building Appeals Board (BAB) case concluded last year, the Watergate owners’ corporation (OC) has taken VCAT action against nine owners of short-stay apartments in its building.

The OC alleges that the nine owners have breached multiple OC rules by allowing their apartments to be used as short-stay accommodation through the Docklands Executive Apartments (DEA) business.

DEA operator Paul Salter represented all nine owners at the VCAT hearing, which was heard by member Linda Rowland on April 13 and 14.

VCAT is the third tribunal or court to deal with the issue of short-stays in the Watergate building, with the matter having previously been heard at the Building Appeals Board and the Supreme Court and Court of Appeals.

However, the current VCAT hearing is being brought by the OC, whereas the previous case was between Mr Salter and the City of Melbourne.

Alleged breaches recorded by the OC include leasing apartments for less than 30 days, using apartments for commercial purposes and moving items likely to cause damage or obstruction through the common property without notifying the building manager.

The OC’s lawyer Tim Margetts, who had previously represented the Council at the BAB and the Supreme Court, told the tribunal the short-stay business was a breach of OC rules because it was conducting trade from apartments.

He also maintained that the behavioural characteristics of short-term residents were different to those of long-term residents and that damage was caused to common property in the building as a result of the short-stay apartments.

“We say there really can’t be any dispute that the use of the apartments for letting short or long-term is conducting a business,” Mr Margetts said.

He said the “line has been crossed” because the number of short-stay apartments operated by DEA had increased from three to 11. Nine of the apartments are the subject of the current VCAT proceedings.

However, Mr Salter’s lawyer David Fairweather said while DEA was a business, the business itself was not being operated within the apartments.

Mr Fairweather also contended that the rule restricting commercial activity was discriminatory in its effect.

He asserted that the rule relating to commercial activity related to activity within the apartments not the surroundings.

Mr Fairweather said the apartments in question were equipped solely for the purpose of habitation or dwelling and that tribunal should look at the use of the occupier rather than the owner.

“If we looked into the apartments and saw no facilities for living but saw facilities for office or trade than it would be commercial,” Mr Fairweather said.

“Central to the case is that short-term accommodation is not commercial in nature simply because its short-term. What you need to do is look at the activity that’s occurring on the land.”

However, Member Rowland appeared to reject this, saying “commonsense and practicality suggests it’s a business”.

The Watergate short-stay saga began in 2011, when the council issued building orders against owners of short-stay apartments, which Mr Salter unsuccessfully appealed at the BAB.

However, a successful appeal by Mr Salter to the Supreme Court, followed by an unsuccessful appeal at the Court of Appeals by the council resulted in the case returning to the BAB to be reheard.

In October 2014, after two and a half years, the case reached a conclusion at the BAB with the council and Mr Salter reaching an agreement that he would install smoke alarms and evacuation signage in short-stay apartments.

However, not content to wait on the outcome of the BAB case, the Watergate OC had already issued multiple breaches against short-stay owners and filed the current VCAT action against the owners.

The original BAB case was used as a test-case by the council and focused on the Building Code of Australia, meaning the outcome potentially had national significance.

Mr Margetts spoke at VCAT about the significance of the issues surrounding short-stay accommodation in residential buildings at VCAT saying: “there are numerous residential towers being constructed in Melbourne at the moment, it can safely be assumed that all of these buildings will have rules dealing with the issue of short-term accommodation.”

However, Member Rowlands responded by saying “this case will be decided on the law, not the politics.”

The current VCAT action focuses specifically on the rules of the Watergate OC, which do not allow stays of less than 30 days.

Significantly, not all OCs have this rule, and the mechanism for adding new rules is difficult due to the necessity of a special resolution, which is rarely achieved in inner-city high-rises due to the high number of non-resident or off-shore owners.

Both parties will make their final submissions at a VCAT hearing on May 20.

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