Owners corporation strife: Unauthorised renovations supplanted by the Tribunal

Owners corporation strife: Unauthorised renovations supplanted by the Tribunal

By Maxim Oppy, Law Clerk and Alicia Hill, Principal, MST Lawyers

 

The recent Victorian Civil and Administrative Tribunal (VCAT) decision of Owners Corporation SP22776 v Lunn (Owners Corporations [2019] VCAT 2057 serves as a cautionary example of the costs involved in making unauthorised alterations to common property. This case also illustrates how the Tribunal delineates common property and decides on which order is needed to remedy a breach of owners corporation rules.

 

Owners Corporations

In Australia ownership of multi-occupancy developments, such as apartments or townhouses, is typically arranged through Strata title. Under Strata title individuals own particular lots within a development, whilst the remaining common property is shared equally between all lot owners. Common property is managed by an owners corporation (formerly known as a body corporate). Every lot owner is a member of the owners corporation and may vote on certain matters. Members may also be elected to the owners corporation committee which can make a wide range of decisions about the management of common property.

Owners corporations are governed by the Owners Corporation Act 2006 (Vic), as well as owners corporation rules. By default, the Model rules of an owners corporation, as set out in the Owners Corporations Regulations 2018 apply, though these can be changed by a vote of the owners corporation members. Relevantly to this case, the rules prohibit altering or damaging common property, obstructing the use of common property by others and using common property as a garden without the written consent of the owners corporation.

 

The dispute

This dispute concerned a building originally built in 1927 which was subdivided and now contains 21 lots as well as a rooftop area which is common property. The Respondent in this matter, Ms Lunn was the owner of Lot 18, which is located on the rooftop of the building. The south western wall of her lot adjoined the common property rooftop area. In 2015 Ms Lunn made a number of alterations to the rooftop space and adjoining south western wall. She enlarged the access door from a single door to a double door and installed a window. In addition, she placed four large planter boxes next to the wall.

Prior to making these alterations she sought approval from the owners corporation, and although the owners corporation committee considered her request they never gave her explicit consent. Ms Lunn took the lack of a response as an indication that there were no issues and proceeded to obtain council approval and carry out the works. In response, the owners corporation served on Ms Lunn a breach notice stating that her renovations had breached several of the owners corporation rules. After Ms Lunn failed to take any action to rectify the alleged breaches the owners corporation applied to VCAT.

 

At the tribunal

In regards to her renovations of the south western wall, Ms Lunn was alleged to have breached the owners corporation rules by damaging common property and making alterations to common property without approval from the owners corporation. In reply Ms Lunn argued that the south western wall which adjoined her lot to the common property was within her lot, and as such any alterations did not require approval. In deciding this issue Senior Member Warren firstly established that whether a wall is part of a lot or part of the common property is determined by the registered strata plan, which in this instance dated back to 1985. Senior Member Warren also stated that the tribunal will take a practical approach to interpreting the plan, and considered the expert opinion of a surveyor who was hired by the owners corporation. The plan showed that the south western wall of Lot 18 was the border between the lot and common property. According to the relevant subdivision procedures, unless otherwise stated, where a boundary is defined by a building wall, the boundary is taken to be the median (or middle) of that wall. As such, the installation of the double door and the window constituted alteration to the common property of the owners corporation in contravention of the rules. Additionally, the construction work undertaken to renovate the wall was found to have damaged the waterproof membrane and flashing on the roof area which is also a contravention of the rules.

In relation to the planter boxes the owners corporation claimed that Ms Lunn had breached the rules by obstructing the use of the common rooftop area and by using common property as a garden without approval from the owners corporation. Ms Lunn conceded that the planter boxes were on common property but claimed that because other lot owners had placed items on common property without permission the owners corporation was estopped from refusing her permission. This submission was also rejected by Senior member Warren who helpfully recounted the elements of equitable estoppel from the seminal case of Walton Stores (Interstate) Ltd v Maher 164 CLR 387 as follows:

  1. The party claiming the estoppel must have assumed a particular legal relationship existed or would exist between the parties; and
  2. The other party had induced that assumption; and
  3. The party claiming the estoppel then acts on the assumption; and
  4. The other party knew this was occurring; and
  5. The party claiming the estoppel suffers detriment because the assumption is not fulfilled.

Whilst limited evidence was adduced in regards to this claim, the tribunal held that there was nothing that could be considered a representation by the council that could have induced Ms Lunn to assume no consent was needed. Further, considering the fact that Ms Lunn initially applied for consent from the owners corporation, she could not prove that she relied on such an assumption. As such Ms Lunn was found to have breached the owners corporation rules with both the wall renovations and the planter boxes.

 Orders of the Tribunal

After declaring that Ms Lunn had breached the rules, Senior Member Warren ordered that Ms Lunn must reinstate the south western wall of Lot 18 to its previous state and remove the four large planter boxes. While this order will incur significant expense to Ms Lunn and seems very onerous the Tribunal considered it necessary to do justice. before making an order, the Tribunal must consider a number of matters set out in section 167 of the Act, most important is conduct of the parties.

The Tribunal considered the fact that Ms Lunn was aware of the rules and simply decided to ignore them. It also received evidence from other residents who stated that they no longer felt comfortable using the rooftop space as they felt they were intruding on Ms Lunn due to her view over the common area. The large planter boxes were held to impinge on the use of the other residents, whilst providing them with no benefit. Because of this the orders of reinstatement were required to ensure that the rooftop common area remained, in the words of Senior Member Warren, “an ideal place to recreate and enjoy the St Kilda lifestyle”.

Commercial Considerations

This decision reaffirms the importance of paying close attention to the owners corporation rules, as well as the strata plan, before carrying out any renovations. Particular care should be taken when considering alterations to external walls of a lot, as whether or not these are common property may differ depending on the plan. Deciding to proceed without consent may be convenient in the short term, but it can turn out to be extremely costly if VCAT orders all the work to be undone.

 If you have any questions about this article or owners corporations disputes, please feel free to contact Alicia Hill by email or by telephone on +61 3 8540 0200.