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Landmark short-stay decision

10 Jun 2014

Landmark short-stay decision Image

A landmark decision made against a short-stay apartment operator in Southbank is set to have repercussions for many apartment complexes.

On May 13, the Victorian Civil and Administrative Tribunal (VCAT) upheld its November decision that the short-stay operator had breached the owners corporation (OC) rules and must stop operating as a serviced apartment business, at 38 Wells St, quashing the operator’s appeal.

The decision will affect apartment complexes in Southbank and surrounding areas like Docklands and the CBD.

VCAT’s final decision was that the operator had indeed broken an existing OC rule, rule 2(d) that states members must not: “Use or occupy any lot or lots or any part thereof as a shop or other place for carrying on any trade or business.”

A spokesperson for the OC’s lawyers, Tisher Liner FC Law, said the VCAT order was the first of its kind against a short-stay operator and may prompt other OCs into action.

Tisher Liner FC Law’s Nicole Wilde told Southbank Local News that the case showed OCs that if they want action on short-stay operators, they have to take it on themselves.

“This case proves you can’t just wait for the council to act. Yes, it will cost you for a lawyer, but our clients have found, and this is certainly the case here, that the benefit outweighs the cost,” Ms Wilde said.

Ms Wilde explained that the evidence of owner residents against short-stays was vital in winning the case.

“What really got this decision over the line was not only that we proved the defendant was running a business, but that the business was causing distress to other residents, over a long period of time,” she said.

This case began when the OC issued a notice to the operator.  It then entered into mediation before it went to VCAT. VCAT issued a cease and desist order in November, which was subsequently challenged but ultimately lost by the short-stay operator. Ms Wilde also said the decision may lead to rules specifically outlawing short-stay operations.

“In Southbank especially, OCs should check their existing rules to find out what their rules are. They may find short-stays are already breaking a rule,” Ms Wilde said.

“Owners or managers who attempt to draft the rules themselves should be careful. It is preferable to have them drawn by a specialist lawyer, because it’s effectively a contract between the OC and the owners and it can be very difficult to get the rules changed.”

According to Ms Wilde, there are other existing rules that could be use in future cases, common among OC rules.

“A lot of OCs have a rule that doesn’t let owners do anything to increase the insurance premium and short-stay operation can increase it.”

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