Can An Owners Corporation Issue Fines Victoria?

Owners Corporations (OC) in Victoria play a crucial role in maintaining harmony and upholding rules within the building. But when it comes to enforcing rules and what to do when a breach happens, a common question arises: Can an Owners Corporation issue fines Victoria?

OCs have the authority to take action about an alleged breach by a lot owner or an occupier of a lot, or a manager. The OC or manager can issue notices and provide 28 days to rectify the breach. If the breach is not rectified a final breach notice should be issued. If the issue persists, the OC can file a case with Victorian Civil and Administrative Tribunal (VCAT), a dedicated legal body, that oversees the imposition of fines or make orders, protecting the rights of all residents. It’s important to understand that the power to impose fines or make orders rests solely with the VCAT. 

Legal Boundaries and Limitations by OC Act 2006

While the Act doesn’t grant OC the power to directly issue fines, it does provide mechanisms for enforcing rules and resolving breaches:

  • Section 153: This section kicks things off. It applies when the OC becomes aware of a potential breach, either through a complaint or another way. 

However, this section does not apply to the recovery of any fees, charges, contributions or amounts owing to Owners Corporation under section 28. 

The OC then has three options:

  1. Take action themselves under this Part (which likely involves issuing a notice).
  2. Apply to VCAT for an order to fix the breach.
  3. Do nothing. The OC can’t take action or go to VCAT unless they’ve followed the dispute resolution process outlined in the OC’s rules and believe the issue wasn’t resolved.
  • Section 154: If the OC decides not to take any action, they must notify the person who complained (if any) and explain their reasoning.
  • Section 155: If the OC chooses to take action, they must send a written notice to the alleged offender. This notice details the suspected breach and requires them to fix it within 28 days. If the offender is a tenant, a copy of the notice goes to the lot owner as well.
  • Section 156: If the breach isn’t rectified within 28 days, the OC has three options:
  1. Give the offender more time.
  2. Issue a final notice.
  3. Drop the matter.
  • Section 157: A final notice is a formal written warning. It gives the offender 28 days to fix the breach and warns that the OC may go to VCAT if it’s not addressed.
After the final notice: If the issue remains unresolved, the OC can either apply to VCAT for an order or decide not to pursue it further. They must then notify the offender and anyone who complained about the initial breach.

Fines vs. Fees: Owners Corporations can only charge fees authorised under the Act, such as levies for operational costs.  

VCAT’s Role: VCAT is the sole entity with the authority to impose fines or penalties for breaches of OC Rule. Owners Corporations cannot create OC Rule that purports to impose fines.

Exploring the Authority of Owners Corporations to Impose Penalties Outside Victoria

While Victoria, like New South Wales, prohibits OCs from issuing fines directly, other Australian states are exploring this approach. In Queensland, a strata reform roundtable is considering granting Owners Corporations the power to issue fines for OC Rule breaches. Proponents argue fines could deter disruptive behavior, potentially preventing injuries or even saving lives. Examples include:

  • Loud noise violations
  • Smoking in restricted areas
  • Unruly balcony behavior

However, concerns exist regarding the potential abuse of this power. Safeguards and clear guidelines would be necessary before implementation.

Conditions Which the Tribunal Can Impose Fines or Penalties

While OCs play a crucial role in managing common property and ensuring compliance with established rules, they do not have the authority to impose fines directly. Moreover, OCs must ensure that their rules are clear, reasonable, and non-discriminatory, avoiding any unfair treatment of lot owners or occupiers.

However, when disputes arise, such as breaches of OC Rule or issues concerning the management and use of common property, the VCAT can intervene to provide resolutions. 

VCAT’s involvement can cover a range of issues, including but not limited to:

  • Recovering fees from lot owners who are in arrears.

Example case: Unpaid Fees

If a lot owner consistently misses their monthly contributions, and you’ve followed the proper procedures by sending a final payment notice, there are steps you can take. After waiting a designated period (like 28 days) following the final notice, the Owners Corporation can seek assistance from VCAT. They have the authority to enforce outstanding fee payments from the lot owner.

  • Changing a plan of subdivision to reflect the evolving needs of the property.
  • Regulating short-stay accommodation to ensure compliance with community standards.
  • Resolving neighbourhood disputes that affect service companies, company title corporations, or unit owners.
  • Overseeing owners corporation management to maintain effective governance.
  • Ensuring repairs and maintenance of common property are carried out appropriately. 

Example case: Common Property DamageSuppose a lot owner consistently damages common property, despite receiving warnings and notices. The OC has followed due process, providing clear documentation of the breaches. If the lot owner fails to rectify the damage within the specified time frame, the OC can apply to VCAT for an order requiring the owner to repair or compensate for the harm caused to the shared property.

In this case, VCAT’s intervention ensures that common property is maintained and protected for the benefit of all residents.

  • Addressing breaches of owners corporation rules to uphold community living standards.
  • Managing fees for the maintenance of common facilities shared by lot owners.

Example case: Shared Swimming Pool Maintenance Fee DisputeA resident in a complex with a shared pool refused to pay the annual maintenance fee, arguing they don’t use the pool. Despite explanations from the OC about shared responsibility for common areas, the owner didn’t budge. After failed attempts at resolution, the OC applied to VCAT. VCAT will decide if the owner must pay their share based on the OC’s rules and shared property principles.>/div>

If someone keeps breaking OC Rules, The OCs Act (Section 166) empowers the VCAT to order a civil penalty of up to $1,100. This fine goes directly to the OC, not the government.

Protections and Rights of Property Owners

Section 152 of the OC Act specifically empowers lot owners, occupiers, or managers to lodge formal complaints regarding breaches of the Act, regulations, or rules. In some cases, the OC manager would ask the contractor to issue an invoice to the OC directly, the OC can then charge the lot owner in the form of a special levy (if the contractor attends to works related to the private lot). This provision ensures that individuals have a recourse to address grievances and maintain the integrity of the OC’s operations. 

For example, a lot owner in a Victorian residential complex is unfairly alleged for a supposed breach of the OC’s rules by an occupier. The owner believes it is unjust as the alleged breach is not covered under the current regulations. Under Section 152, the owner can submit a written complaint to the OC, outlining the reasons for disputing the allegations by an occupier. Suppose the OC fails to address the complaint satisfactorily. In that case, the owner can escalate the matter to the Dispute Settlement Centre of Victoria or ultimately to the Victorian Civil and Administrative Tribunal (VCAT) for resolution.

Complaint Process:

  • A complaint must be submitted in writing using the prescribed form.
  • Complaints can be made against a lot owner, occupier, or manager for alleged breaches.
  • The Act does not allow for complaints against the OC or the committee, except if it pertains to actions taken by the manager on their behalf.
  • Matters of personal injury and recovery of fees or charges owed to the Owners Corporation are excluded from this process.

While the Act empowers OC to enforce rules, it also ensures property owners have rights and recourse when disputes arise.

Property Owner Rights:

  • The right to participate in decision-making at general meetings, allowing them to influence the management of the OC.
  • The right to access and use common property and facilities provided by the OC, as outlined in the OC Rule.
  • The right to seek repairs and maintenance of common property from the OC, ensuring a safe and functional environment.
  • The right to use a power of attorney, which can only be held by a family member of a lot owner.

 Property Owners Responsibilities under the Act:

  • Owners must comply with the OC Act, rules, and regulations.
  • Owners are responsible for properly maintaining the exterior appearance of their lot and any services that exclusively serve their unit, preventing issues that might affect other owners or common areas.
  • Owners must avoid using or neglecting common property in a way that could cause damage or deterioration.
  • If your lot boundary bisects a roof, you’re responsible for maintaining the eaves and guttering that overhang your portion.
  • Owners have the right to decorate or attach fixtures within their unit, as long as the boundaries align with the plan of the subdivision and the work involves typical activities like painting or installing floor coverings.
  • If you apply for a building permit, planning permit, or plan of subdivision affecting your lot, you must notify the OC.
  • When selling a lot, the previous owner must inform the OC of the new owner’s details within a month. Similarly, the new owner has a one-month window to provide their contact information.
  • If you don’t occupy your lot or will be away for more than 3 months, you must provide the OC with an Australian mailing address for service of notices.

Practical Considerations for Owners Corporations

Owners Corporations (OCs) in Victoria are vital in maintaining shared spaces and ensuring a smooth coexistence for residents within multi-owned properties. While enforcing rules is crucial, navigating the topic of fines requires careful consideration. Here’s how Victorian OCs can approach rules effectively:

Best Practices for Imposing Rules

Owners Corporations must enforce rules fairly and consistently. Ensure that all residents know the rules and the consequences of breaching them. Use clear, unambiguous language when drafting rules to avoid misunderstandings. When a breach occurs, document it meticulously, including details like time, date, and violation. If necessary, issue them notice of the breach using an approved form and provide a rationale for the decision.

Effective Communication Strategies

Open and regular communication is the cornerstone of a positive relationship with property owners. Establish multiple channels for communication, such as emails, newsletters, or an online portal, and encourage owners to voice their concerns and suggestions. When discussing potential penalties, be transparent about the reasons and listen to the owners’ perspectives. This approach resolves issues more effectively and builds trust and cooperation.

Maintaining a Positive Community Atmosphere

While rules are essential, so is the community spirit. Balance enforcement with empathy. Understand that each owner’s situation is unique and be willing to discuss alternative solutions when possible. Celebrate community achievements and organise events that unite people, creating a sense of belonging and mutual respect. This positive atmosphere can often lead to voluntary compliance with regulations, reducing the need for fines.

Remember, the goal of an Owners Corporation is not just to manage the property but also to create a community where everyone feels valued and heard. By following these guidelines, you’ll be well on your way to achieving a well-managed and happy community.

 

The Bottom Line

While Owners Corporations in Victoria are key enforcers of community rules, they lack the direct power to levy fines. Instead, this responsibility falls to VCAT, which upholds legal standards and protects member rights. Same thing for an issue about legal recourse against an Owners Corporation. It is possible to sue for negligence in property maintenance, failure to resolve disputes, or financial mismanagement. However, such actions should be carefully considered and typically follow a process involving internal complaints, mediation through the Dispute Settlement Centre of Victoria, and potentially escalating to VCAT. 

Understanding these legal frameworks is essential to prevent misinterpretations and ensure a fair and just community environment.

If you and your Committee are trying to navigate the complexities of Owners Corporation management or considering appointing a better OC Manager, Strata Management Consultants is here to help. Our experienced team can offer valuable insights and help your OC to change strata management companies.

 

The contents of this article or website are only intended to provide a general overview of the topics discussed. The author of this article makes no representations as to the accuracy or completeness of any information and the information is not intended to constitute investment, legal or professional advice. You should seek professional advice before acting or relying on any of the content. This article does not contain references to any specific company, organisation or individual, unless expressly specified.
Posted
May 02, 2024
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