Dispute resolution

The dispute resolution provisions of the Owners Corporations Act are complex. Complainants may seek CAV conciliation or mediation. VCAT may determine disputes. Internal dispute resolution is bound by process. VCAT Owners Corporation List can issue monetary orders. Avenues for dealing with illegal parking are limited. Wheel clamps and the seizure of offending vehicles is forbidden.

The dispute resolution provisions of the OC Act are complex. Disputes may be resolved in the following ways.

1   Under part 10 – dispute resolution

Under section 152, any lot owner, occupier, or manager or owners corporation may make a complaint in writing in the approved form about an alleged breach of the OC Act, OC Regulations or Rules by a lot owner, occupier or manager. This section precludes a complaint against the owners corporation or the Committee. A complaint cannot be made about a personal injury.

Under section 153, the OC must respond to a complaint under section 152 in three ways:

iit may provide a notice to rectify a breach (s 155) followed by a final notice (s 156) and ultimately, an application to VCAT;

iiit may decide to take no action; or

iiiit may apply to VCAT for an order requiring the person to rectify the breach.

A person may formally request the Director of CAV to refer a matter to conciliation (s 160). This is available to a current or former lot owner, mortgagee of a lot, an insurer, an occupier, purchaser and manager (s 161). This precludes a complaint made against the owners corporation or the Committee unless the dispute relates to something done by the manager on behalf of the owners corporation or Committee.

2   Under part 11 – applications to VCAT

VCAT may determine any dispute under the OC Act, OC Regulations, Rules or the Subdivision Act.

Therefore, a purchaser or an insurer can complain to CAV but not to VCAT, whereas the reverse applies to a former occupier or former manager. Unless the Director of CAV is approached, there is no formal means of dispute resolution by conciliation or mediation.

An owners corporation is prevented from taking action under part 10 or applying to VCAT for an order in relation to an alleged breach unless the dispute resolution process required by the Rules has first been followed and the owners corporation is satisfied that the matter has not been resolved through that process (s 153). VCAT may make an order dismissing or striking out an application by an owners corporation for an order requiring the rectification of a breach referred to in section 153 if it is satisfied that the owners corporation has not complied with that section (s 164).

Disputes under the Subdivision Act do not require internal dispute resolution procedures (s 34 Subdivision Act).

The internal dispute resolution process is set out in model rule 6 of the OC Regulations (sch 2). An owners corporation may make its own rules regarding this process.

Internal dispute resolution process

Within 14 working days after receipt of a complaint in the approved form, a meeting must be held between the complainant and either the grievance committee or the owners corporation. A person who may be a lawyer may represent each party.

If the owners corporation decides not to take action or to apply to VCAT for an order in respect of an alleged breach, it must notify the complainant setting out reasons for the decision (s 154). Presumably, that is not the case if it is the owners corporation that made the complaint. If it decides to take action, it must give notice to rectify the breach followed by a final notice (ss 155–157). There is case law to suggest that such notice is unnecessary in circumstances where it would be futile to do so.

If the owners corporation does not respond or the complainant is unsatisfied with the outcome, conciliation through CAV is available. There is nothing to prevent the complainant (not the owners corporation) applying directly to CAV and avoid the internal dispute resolution process.

Section 159 requires that the owners corporation reports at an AGM any complaints received and where action is taken at VCAT. The report must not identify the parties in dispute.

Application to VCAT

The Owners Corporation List of VCAT that hears owners corporations disputes is a no-cost jurisdiction. One may require the Tribunal’s consent to be legally represented. Under section 168 of the OC Act, VCAT has the discretion to award monetary orders, including expenses and costs on application. There is now a presumption that a successful party will be awarded relevant filing and hearing fees. An owners corporation must follow up a notice with a final notice before applying to VCAT (s 157).

An owners corporation can apply to VCAT for an exemption from compliance with certain requirements under the OC Act (s 170). An application for an exemption from the requirement to have a unanimous resolution requires that the vote in favour of the resolution be at least 75%, with no votes in the negative (s 171(4)).

Clause 51ADA of schedule 1 of the VCAT Act provides that the Tribunal may make an order for costs incurred by an OC other than costs incurred by a professional advocate such as those of a manager.

Illegal parking

The impact of trespass to land and driveway obstruction by a motor vehicle may range from temporary nuisance to major disruption, and self-help mechanisms such as the attachment of wheel clamps, obstructing or otherwise detaining an offending vehicle or demanding payment for the release of that vehicle is an offence under the Road Safety Act 1986 (Vic) (“RSA”). The Model Rules also prohibit obstruction of common property.

Police, municipal council officers and the owners corporation will not be involved with illegal parking on private land unless the offending vehicle is blocking a driveway and causing obstruction to traffic. An abandoned vehicle on private land will be removed by the local council following appropriate inquiries.

Parking in the private car space of another person presents difficulties. VicRoads will not provide the name of the registered owner on grounds of privacy. Though an owner or occupier may remove a trespassing vehicle from their property to a place within a reasonable distance from the subject land, such person or persons would be liable for any damage to the vehicle or the possibility of charges for theft or interference with a vehicle under section 70 of the RSA.

Other options include the installation of lockable metal barriers where the problem is frequent, or a notice placed on the vehicle that threatens legal action. Do not lift the windscreen wiper for fear of a claim of interference. Alternatively, commence proceedings in the Magistrates’ Court of Victoria. In such event, photographic evidence of the trespass and/or a witness is advised.

The owners corporation may enter into a parking area agreement with the local council to enforce parking restrictions; however, this option is not available in certain controlled situations, such as underground parking.

Abandoned goods on common property

Abandoned goods may be found in storage cupboards, carports, fire cupboards and exposed areas. The OC Act does not make provision for dealing with abandoned goods on common property. The issue for the owners corporation is to locate the owner of the goods, deal with valuable items and remove items that have no value. The owners corporation is not responsible for goods left on private property.

All reasonable steps should be taken to identify the owner of the goods. Investigative steps include contacting police to determine if a vehicle is stolen or searching the Personal Property Securities Register on the ASIC website to ascertain a security interest on identifiable property. If the goods belong to a lot owner, a notice specifying a removal period should be provided. An application to VCAT may be made for orders to deal with valuable goods including destruction, sale and remittance of funds to the State Revenue Office under unclaimed revenue legislation.

All goods should be photographed. Dispose of goods that have no value. Advertise goods of value by placing a notice in a clear waterproof sleeve in a prominent location advising that the goods will be removed if not claimed within 14 days. Thereafter, store items in a protected location until VCAT determines the application.

Adverse possession of common property

Under the OC Act, common property affected by an owners corporation is not subject to adverse possession (a claim of ownership) by another lot owner, irrespective of the period of possession (s 222), but a neighbour who is not an owner in the plan of subdivision may make a claim.

Water meters

Approval for the installation of individual water meters is obtained by a majority vote of the committee or the owners corporation. Where a complex is served by one meter, the water authority will often apportion charges equally among lots. The owners corporation may pass an ordinary resolution that consumption be levied according to lot liability. The authority must be notified in writing with the schedule of lot liability included (s 24 Water Industry Act 1994 (Vic)).

Planning permits

It is not generally appropriate for an owners corporation to lodge an objection to a planning permit, as that is not a function or power conferred in sections 4 or 6 of the OC Act. The owners corporation does not have representative capacity to object on behalf of owners whose interests are affected by the planning proposal. Ordinarily, an owners corporation will not have any proprietary interest that is adversely affected by a planning application.

However, in the event that the owners corporation objects and the matter ultimately proceeds to VCAT, the likelihood is slim that the owners corporation would be at risk of an adverse costs order. Section 109(1) of the VCAT Act makes it clear that there is a presumption that each party bears its own costs. VCAT may make an order awarding costs if satisfied that it is fair to do so, having regard to factors listed in section 109(3).

Legal professional privilege

Consider a dispute between a lot owner and the OC about the ingress of water into the property of the lot owner. In this scenario, the parties may rely on expensive expert reports. If the OC commissioned a report in the course of a VCAT proceeding, could the affected lot owner request a copy?

An OC may oppose by claiming legal professional privilege, a principle that confidentiality between a lawyer and his client outweighs the public interest of the court’s access to all the relevant material for decision. The High Court has stated that legal professional privilege is an important common law immunity that will not be taken to have been abrogated by statute in the absence of clear words or necessary implication to that effect.

As the OC Act does not abrogate legal professional privilege, it is clear that the report is privileged. This may seem a unique situation given that the lot owner is a member of the owners corporation. It is submitted that this situation is no different to the relationship between a company and a shareholder.

The lot owner might seek an order under section 168(c) of the OC Act for exclusion from such contribution.