How ‘Substantial’ is the proposed Owners Corporations Amendment (Short-stay Accommodation) Bill 2016?
If passed, the Owners Corporations Amendment (Short-stay Accommodation) Bill 2016 ('the Bill') will nearly triple the number of times the word 'substantial' or 'substantially' appears in the Owners Corporations Act 2006. Under the current legislation, the word 'substantial' is generally referred to in the context of the benefit principle of raising funds for repairs, maintenance or other works.
However, under the Bill, the word ‘substantially’ is proposed to be used in the context of short-stay occupants ‘substantially’:-
damaging or altering property;
causing a hazard to the health safety and security of a person;
obstructing use and enjoyment;
interfering with use and enjoyment.
Owners and occupiers of residential apartments in Victoria are currently generally regulated by the Model Rules for an Owners Corporation as set out in Schedule 2 of the Owners Corporations Regulations 2007.
The Model Rules impose obligations on owners and occupiers to refrain from certain conduct, including:-causing a hazard to the health, safety and security of other people; obstructing use and enjoyment; damaging or altering property; unreasonable interfering with peaceful use and enjoyment.
If an owner or occupier breaches the Model Rules, an Owners Corporation may follow the Rule breach procedure in Part 10 of the Owners Corporations Act 2006. There is currently no requirement that the Owners Corporation show the owner or occupier’s breach was ‘substantial’ before the breach procedure can be implemented.
Contrastingly, it appears that under the proposed Bill, the proposed range of remedies VCAT would be able to award those affected by disruptive short-stay occupants will only be available if an eligible applicant first establishes that the short-stay occupant’s behaviour has caused ‘substantial’ interference or damage to the building or its occupants. This proposed higher legal threshold may be because of the proposal to enable an applicant affected by short-stays to seek monetary orders that would have effect jointly and severally against both a short-stay provider and a short-stay occupant (who is often unknown and difficult to locate once their stay ends).
However, in circumstances where a short-stay provider is proposed to have the ability to avoid joint liability for a monetary order if it can satisfy VCAT that it took ‘all reasonable steps to prevent any relevant breach by a short-stay occupant’, perhaps it is unnecessary to differentiate between breaches of Owners Corporation Rules by short-stay occupiers on the one hand, and all other owners and occupiers on the other.
In the strata (Owners Corporations) legislation in the Australian Capital Territory, a non-resident lot owner is liable separately and together with an occupier of a lot for any breach of the Owners Corporation’s Rules by the occupier, unless the lot owner proves that it took reasonable precautions and exercised appropriate care to prevent the occupier’s breach (see Section 107 of the Unit Titles (Management) Act 2011). Perhaps in Victoria, that type of legal liability on lot owners would not only increase their interest in ensuring their tenants (regardless of whether they are short-stay occupiers or not) comply with the Owners Corporation Rules, but would also make it much easier for affected Owners Corporations and lot owners to obtain quick and effective redress when necessary.
Any further questions, please contact a member of our Owners Corporation team.
