Are there any recent cases in 2016 about short stay apartments in Victoria? - Part one

Short stay accommodation

1.     This area of property law has generated a large amount of media attention. Solutions to what is seen as a problem have been attempted on at least three fronts.

2.     In today's post, I write about the Melbourne City Council taking a relatively large-scale operator in Docklands (at the Watergate Apartments, 18 Waterview Walk, Docklands) to the Building Appeals Board to have an order made that these types of arrangements breached the Building Code.

Building Appeals Board

5.     In 2011, the City of Melbourne served building orders on the owners of 42 units who were using or permitting their units to be used for Short-Term Letting (including the operator in question). The orders required the owners to cease to use the apartments as ‘short term commercial accommodation (hotel) or the like’, which it was alleged rendered such apartments a Class 3 building under the Building Code of Australia. Thirty-one of the 42 affected unit owners challenged the orders in the Building Appeals Board.

6.     On 22 March 2013, the Building Appeals Board upheld the orders of the City of Melbourne’s Municipal Building Surveyor on the basis that ‘the use of the apartments for commercial short time stays is not a use which is permitted under the existing occupancy permit for Class 2 (which involved the operation of a business)’.

7.     The respondent owners appealed to the Supreme Court and, on 30 May 2013 (See: Salter v Building Appeals Board & Ors [2013] VSC 279), Beach J set aside the Building Appeal Board’s decision and remitted the matter back to the Building Appeals Board for determination.

8.     On 12 December 2013, the Court of Appeal dismissed the appeal by the City of Melbourne from the decision of Beach J (See: Genco & Anor v Salter & Anor [2013] VSCA 365) and held that that the Building Appeals Board had misdirected itself in concluding that ‘ordinarily a dwelling is not a building used for short term accommodation’. Accordingly, the matter was remitted for reconsideration to the Building Appeals Board where ultimately the matter was settled and orders were made by consent on 30 October 2014 in the following terms:

With the consent of the parties, and without the Board determining the merits, it is ordered pursuant to section 149(1)(c) of the Building Act 1993 (Vic) (“the Act”) that:

1. The building orders dated 19 October 2013, to which these proceedings relate, are varied by way of replacing paragraphs 6 and 7, with a new paragraph 6 as follows:

You must carry out the following within 30 days of the date of this order (being the date of the varied order):

a. install a smoke alarm that complies with AS3786 inside each bedroom of the apartment and interconnected in accordance with AS3786 with each smoke alarm within the apartment;

b. affix an emergency evacuation plan to the rear of the entry door of the apartment to the nearest fire isolated exit stair in accordance with AS3745; and

c. provide the municipal building surveyor, Melbourne City Council, with a certificate under section 238 of the Act confirming compliance with this order and the building regulations.

2. Pursuant to section 149(4) of the Act, the Board orders that:

The municipal building surveyor, Melbourne City Council, review the compliance of the “Exit” signs in the common corridors that provide access and egress to the apartments that are the subject of these proceedings, having regard to the report of Mr Adrian Lee titled “City of Melbourne Watergate Apartments Further Report, Issue 1 dated 17 September 2014”, with a view to issuing a building notice on the relevant Owners Corporation without delay, should the exit signs be found to be non compliant with the BCA Part E4.8(b).

3.  The municipal building surveyor, Melbourne City Council, review whether a written record of the tenants acknowledging the receipt of safety/evacuation induction should be kept on the premises and whether it should be noted as an essential safety measures item referenced in the maintenance determination appurtenant to the occupancy permit. Should the municipal building surveyor determine that such a requirement is appropriate he should take appropriate measures to seek to have it implemented.

4. No order as to costs.

9.     As a result, the owners were effectively allowed to continue to operate as AirBnB’s within the Watergate building, provided they complied with these minor requirements.

10.  The Melbourne City Council has stated that it will review other short-stay cases "on their merits" as they arise. 

11. Therefore, the first 'solution' to the 'problem' of short stay apartments was mostly unsuccessful. 

WG Stark 
Hayden Starke Chambers