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Owners Corporation Law

14 Dec 2017

Strata land 2017: The year in review, and predictions for 2018

As we approach the holiday season and look forward to a well-earned break, it is perhaps important to reflect on the year that’s been and to cast an eye to 2018, which is shaping up to be an important year for those who live in owners’ corporations.

At the absolute top of the list of key events in 2017 was the tragic incident at Greenfell Tower in London. A massive loss of life and, as it is now emerging as the public inquiry starts, a tragedy that could have been minimised or avoided altogether.

In response, the Victorian Government immediately launched its own review into the issues of flammable Alucobest cladding which has been installed on an estimated 5000 buildings in Victoria alone, according to the ABC’s Four Corners program.

Now, one wonders why the Victorian Government did not launch this inquiry two years earlier after the Lacrosse fire. The answer is because of course, no person died in the course of the Lacrosse evacuation, however the Alucobest cladding issue and the consequent risks to life safety were certainly brought to the industry’s and the authorities’ attention at that time.

Still, it’s better late than never that the inquiry has been launched and owners’ corporations will watch on with interest as the stakeholders work through the issues and release a policy response.

The other big issue that came out of 2017 was the sting in the tail of the 2016 Balcombe decision from the Supreme Court. Readers will no doubt remember the ruling of the Supreme Court was that owners’ corporations have no statutory powers to create and enforce certain rules that prohibit certain activities and conduct by persons within lots. This case centred on a rule which restricted short-term letting, however the application of the case and the legal principles within it has spread to a number of other situations.

VCAT released several decisions in 2017 striking down the validity and enforcement of certain rules relating to the use of parking spaces, commercial activities within lots, use of common facilities such as pools and gyms, restrictions on pets and the enforcement of security measures within buildings.

Another issue that owners’ corporations were waiting for in 2017 was the resolution of the short-term letting issue. Alas, the government has made no decision on proper regulations for the short-term letting industry after the Bill was defeated in the Upper House of Parliament following sustained submissions and pressure from owners’ corporation advocacy groups.

The decision by government to reintroduce the Bill in December 2017 without making any amendments at all (but rather seeking to put the boat out by announcing a review two years after the Bill passes) has to be seen as a failure by the government to listen to persons living in owners’ corporations.

As for 2018 and the year ahead, well let me gaze into the crystal ball and cast some predictions for owners’ corporations and the people that live within these communities:

  • The Victorian flammable Alucobest cladding inquiry will conclude as a farce, with stakeholders and experts unable to agree on robust solutions and liability for the industry, leaving owners of buildings with the sole responsibility to remove the flammable cladding and to raise special levies themselves to fix the issue, or bring legal proceedings if they can;
  • A Superior Court will make another decision on the short-term letting issue, and the ability of owners’ corporations to pass and enforce rules to restrict the lots from being used as quasi-hotels, leaving all parties even more confused in the absence of guidance from government;
  • The amendments to the Owners Corporation Act in respect of short-term letting will be defeated again by the Upper House, completing the Labor government’s embarrassment. The government refused to implement a single amendment as recommended by the Upper House. Thus, the Bill is doomed to be consigned to the waste bin. In an election year, no party would want to put their name to this legislation, and risk voter backlash;
  • The current Victorian Government will also delay attempting to pass its reforms to the Owners Corporation Act, again due to the election and the risk of backlash. This legislation has been completed and has been sitting on the shelf for 12 months (parts of it were completed three years ago). The reforms are long overdue, but there is concern from owners’ corporations that the reforms do not favour them, and instead favour the OC management industry, as well as developers and builders; and
  • On a more positive note, owners’ corporation committees will continue to build relationships with other buildings and with advocacy groups and form together to create a powerful and unified voice to engage with government constructively and positively to seek solutions to the issues that concern them. Leadership for the industry shall come from within.

Happy holidays to all, and see you in 2018.


Tom Bacon

Principal - Strata Title Lawyers

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