Owners Corporation SP22776 v Lunn [2019] VCAT 2057 (23 December 2019)

 

This case illustrates that courts and tribunals will, in certain circumstances, order lot owners to reinstate works undertaken by them in breach of the Model Rules of the owners corporation.

 

Background – Owners Corporations

Michelle Lunn is a lot owner of a building in St Kilda (‘the Building’). The Plan was registered in 1985. Ms Lunn owned lot 18, a bedsit-studio apartment, since 2014.

Ms Lunn carried out alterations to the south western wall of Lot 18 to re-locate the access door, enlarge the door from a single door to a double door, and install a window in the south western wall (‘the Works’). The south western wall of Lot 18 adjoined the common property roof top area. The result of the Works was that Lot 18 opens on to the common property roof top area. Ms Lunn also placed four large planter boxes immediately adjacent to the south western wall of Lot 18. The OC claimed that the Works and planter box installation had been undertaken without permission. Ms Lunn did not dispute this.

The OC served breach notices (‘the Breach Notices’) on Ms Lunn in relation to the Works and the planter boxes. No action was taken by Ms Lunn in response to the Breach Notices because she claimed that:

  • the south western wall of Lot 18 is located solely within lot 18 and as such she did not require the consent of the OC to carry out the Works.
  • In relation to the planter boxes, she did not require the consent of the OC because the OC had permitted other lot owners to have items on common property without having obtained the OC’s prior consent and as such the OC was estopped from refusing her permission.

The OC sought orders in VCAT that Ms Lunn rectify the breaches and desist from any further contravention of the rules.

Insofar as the Works were concerned, the central issue for the Tribunal to determine in the proceeding was the location of the boundary between the common property and Lot 18. If it was the median point of the south western wall, then Ms Lunn would have required the consent of the OC to have carried out the Works as they directly involved common property.

In relation to the planter boxes, the issue the Tribunal was required to determine was whether the OC was estopped from refusing consent for the planter boxes to remain on the common property.

 

The Works

The tribunal found that the boundary between Lot 18 and the adjacent roof-top common property was the median of the south western wall of Lot 18. Accordingly, the Works had altered common property.

Section 137(1) of the OC Act provides that a lot owner must comply with the rules of an owners corporation. Accordingly, Ms Lunn was bound by the Model Rules which existed at the relevant time.

At the time of giving the Breach Notices, the Model Rules were set out in Schedule 2 of the Owners Corporations Regulations 2007. The Model Rules referred to in the Breach Notices were:3.1(1) a lot owner must not obstruct the lawful use and enjoyment of common property by others;

  • 3.1(2) a lot owner must not without written consent use any portion of common property as a garden;
  • 3.3(1) a lot owner must not damage or alter common property without written approval of the OC;
  • 3.3(2) a lot owner must not alter or damage the structure that forms part of the common property without written approval.

The Tribunal rejected Ms Lunn’s submission that the Breach Notices were invalid as the rules referred to were numbered differently from the current form of the Model Rules or that the Model Rules did not exist prior to 2 December 2018.

On the evidence before the Tribunal, it held that Ms Lunn did not obtain the prior written consent of the OC to the carrying out of the Works, and that the Works both caused damage to and/or altered the common property. Ms Lunn had therefore breached Rule 3.3(1) of the Model Rules.

 

The Planter Boxes

The OC submitted that the placement of the planter boxes breached Model Rules 3.1(1) and (2).

Ms Lunn submitted that she had assumed that she was able to place the planter boxes on common property because the OC had allowed other lot owners to use common property as their own without first obtaining consent which meant that the OC was now estopped from requiring her to remove the planter boxes.

The OC submitted that the only basis relied upon by Ms Lunn in relation to the planter boxes was the assumption made by her that if other lot owners were allowed to have pot plants on balconies then she could do the same. The OC further submitted that such an assumption was not sufficient to give rise to an estoppel because:

  • there was no evidence of any representation by the owners corporation about the planter boxes;
  • there was no evidence that Ms Lunn had sought permission to place the planter boxes on the common property; and
  • there was no evidence of any form of reliance on any representation allegedly made by the OC.

It was further submitted by the OC that private balconies and even the fire escape balconies were in a different category to the roof-top common area and as such one could not transfer any assumption that may exist as to their use to the roof top common area.

The tribunal held that there was no rational basis disclosed that would have justified Ms Lunn assuming she could place the planter boxes on the roof-top common area. Indeed, Ms Lunn herself conceded that she did not have the consent of the OC to carry out the Works. Accordingly the estoppel argument was rejected.

 

Orders Made (in favour of the Owners Corporation)

Section 165 (1)(a) of the Owners Corporation Act states that the Tribunal may make any order it considers fair including an order requiring a party to do something.

The OC sought orders under section 165 of the OC Act requiring Ms Lunn to remove the planter boxes from the common property and reinstate the south western wall of Lot 18 to its original condition.

Before making an order under section 165, the Tribunal noted that it was required to consider the various matters set out in section 167 of the OC Act including:

  • the conduct of a party;
  • an act or omission by a party;
  • any other matter the Tribunal thinks relevant.

After considering these matters, the tribunal held that, in all of the circumstances, for Ms Lunn to have proceeded with the Works without first obtaining the OC’s consent was imprudent and that it must also take into account the effect on the OC of not ordering the reinstatement of the common property. There was evidence that subsequent to the carrying out of the Works, lot owners were less inclined to use the roof-top common area and that people were concerned about a loss of privacy.

In summation, the tribunal noted that the Works provided no benefit whatsoever to the OC or to the other lot owners that comprise the OC and the benefit of the Works was solely Ms Lunn’s. It therefore ordered Ms Lunn to remove the planter boxes from the common property and that she must reinstate the southwestern wall of Lot 18 to the condition it was prior to her undertaking the Works.

 

Conclusion

This case highlights that, notwithstanding the financial cost to the guilty lot owner, courts and tribunals will not hesitate to order the demolition of work undertaken in breach of the model rules where it is prejudicing other lot owners’ ability to use the common property as intended.

If you would like further advice on owners corporation management matters, James can be contacted by email at JCollier@moray.com.au or by telephone +61 3 9600 0877.  Moray Agnew https://www.moray.com.au/

 

For further reading here is another relevant article regarding owners corporation law and alterations contributed by James Collier, Partner at Moray Agnew:  https://www.strataconsultants.com.au/owners-corporation-management-black-v-owners-corporation

 

The content in this paper is intended only to provide a general overview. It is not intended to be comprehensive nor does it constitute investment nor legal advice. You should seek professional advice before acting or relying on any of the content.

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