VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL CIVIL DIVISION OWNERS CORPORATIONS LIST VCAT REFERENCE NO. OC646/2013 CATCHWORDS Alteration of plan of subdivision-resolution of members not unanimous-application to the Tribunal for consent on behalf of non consenting members-subdivision Act 1988 s32, 34D APPLICANTS Balcombe Griffiths Pty Ltd (ACN: 006 147 968), Anne Micic, Wayne Rotherham, Geraldine Wallish, Peter Chapman, Mary Apostolidis, John Hodgson, Ellersley Holdings Pty Ltd (ACN: 102 472 891), Katrina Crosby, Wayne Dettmann, Jack Miragaya, Cameron Comer, Katrina Crosby, Sophia Everett, George Mendelson, 49 Lisson Grove Pty Ltd (ACN: 005 575 486), Bradley Dolphin, Mary Lees, Peter Benn, Michael Dixon, Questar Capital Pty Ltd (ACN: 128 405 461), Garry Lodge, Patricia Barr, Tams Management Co Pty Ltd (ACN: 005 915 953), Martin Elmslie, David Lorenz, CPT Design Pty Ltd (ACN: 005 607 876), Mullan Design Partners (ACN: tba), Maroso Pty Ltd (ACN: 085 229 241), Christian Wagstaff, Russel Knudsen, W F Glaser, Kathy Glaser, Norman Day, Kristen Day, Ronald Blint, Samuel Elliot, John Linskens, Lisa Palermo, Toni Lawler, Jerry Lee, Edward Cole, A E Fumi, Peter Johnson, H R Storz, Cramy Medical Pty Ltd (ACN: 005 225 089), Matthew Hill, K Glaser, Anne Tucker, Anthony Veal, Julia Chuchman, Hales Holdings Pty Ltd (ACN: 004 883 416), Philip Bailey, Kirtak Pty Ltd (ACN: 005 610 506), Quintlen Pty Ltd (ACN: 005 518 605), Maree Chapman, Sue Hodgson, Marcelle Crosby, Jeanette Dettmann, LG Dolphin, Margaret Johnston, Ann Elmslie, Shelley Freeman, Clive McNamara, Dianne Linksens, Janette Cole, Carmel Johnson FIRST RESPONDENT Corowa Central Pty Ltd (ACN: 009 229 494) SECOND RESPONDENT THIRD RESPONDENT Charles Marcus Reichman Owners Corporation No. 1 RP14334
WHERE HELD BEFORE HEARING TYPE Melbourne Member L. Rowland Hearing DATE OF HEARING 18 June 2013 DATE OF ORDER 20 June 2013 CITATION Balcombe Griffiths Pty Ltd & Ors v Corowa Central Pty Ltd & Ors (Owners Corporations) [2013] VCAT 1011 ORDERS The Tribunal orders and directs: 1. Pursuant to Section 34D(1)(b) of the Subdivision Act 1998, the Tribunal hereby consents, on behalf of those members of the Owners Corporation who have refused consent so that there is now a unanimous resolution of all members of the Owners Corporation to amend plan of subdivision RP 14334 in accordance with the Notice of Ballot to Lot Owners dated 24 August 2012. 2. The third respondent shall at its cost apply to the Registrar of Titles for modification of Plan of Subdivision No RP14334 to create: a. Limited Owners Corporation 2 Plan RP 14334 comprising the building known as 33 Queens Road, Melbourne 3004, b. Limited Owners Corporation 3 Plan 3 RP 14334 comprising the building known as 34 Queens Road, Melbourne, 3004. c. Unlimited Owners Corporation 1 Plan No RP 14334 comprising the remaining area of the subdivision. 3. The Units of entitlement and liability within each Owners Corporation shall be the same as the units of entitlement and liability within the Unlimited Owners Corporation. 4. The parties and the Registrar of Titles shall have liberty to apply in respect of any matter arising out of these Orders. 5. The first respondent s counterclaim OC1509/2013 is dismissed. 6. There is no order as to costs. MEMBER L. ROWLAND VCAT Reference No. OC646/2013 Page 2 of 7
APPEARANCES: For the Applicant For the First Respondent For the Second Respondent For the Third Respondent Mr Griffiths in person Mr T. Boothroyd in person No appearance Mr N. Mermelstein, solicitor VCAT Reference No. OC646/2013 Page 3 of 7
REASONS Background 1 The application concerns 33 and 34 Queens Road, Melbourne. 33 Queens Road, Melbourne is a 3-storey heritage building known as Stanhill comprising 27 residential lots. 34 Queens Road is an 11-storey building comprising 42 lots, which are mixed residential and commercial lots. There are 87 car park lots. 2 In 1979, 33 and 34 Queens Road were subdivided under the Strata Titles Act 1967. The plan of subdivision RP 14334 provided for one Owners Corporation covering both buildings and all the common land. 3 In or about 2002 and with the consensus of the lot owners, the Owners Corporation manager separated the costs of operating the buildings at 33 and 34 Queens Road, so that the lot owners each bore a share of the costs of running and maintaining their own buildings. This division was brought about by very large renovation and maintenance costs for both buildings. Understandably, the residents of 33 Queens Road did not wish to contribute to the cost of renovating and maintaining 34 Queens Road and vice versa. 4 In practice, the Owners Corporation has operated three cost centres for more than 10 years, namely; the common area of 33 and 34 Queens Road, the building of 33 Queens Road and the building of 34 Queens Road. 24 August 2012 ballot to members 5 In 2012 the Committee of the Owners Corporation resolved to put a ballot to the lot owners to regularize the practice of running three costs centres. On 24 August 2012 the Owners Corporation gave notice of ballot to lot owners to seek a unanimous resolution for the formation of a limited owners corporation for each for each of the two buildings and to create an unlimited owners corporation for the common area. A unanimous resolution is required to amend a plan of subdivision. 6 Of the 156 Lot owners, 129 supported the resolution, 9 opposed the resolution and 18 abstained from voting. The motion was passed with an overwhelming majority but it was not a unanimous resolution. 7 I am satisfied that the 18 lot owners who abstained from voting have been served with the ballot and the application to the Tribunal but have refused to provide their consent to the resolution. 8 Of the 9 lot owners who have opposed the application, the first respondent, Corowa Central Pty Ltd represented by Mr T Boothroyd, owns 3 ground floor lots in the 34 Queens Road building and 4 car park lots. The second respondent, Mr Reichman owns one lot in 34 Queens Road and one car park lot. Mr Reichman failed to file a defence to the claim and did not appear at the hearing. The Owners Corporation manager submitted that Mr Reichman no longer opposed the resolution. VCAT Reference No. OC646/2013 Page 4 of 7
9 In summary, there are 27 lot owners who have refused to provide their consent to the resolution and 129 lot owners in favour of the resolution. Application to the Tribunal 10 The consenting majority seek an order from Tribunal under Section 34 of the Subdivision Act 1998 to consent on behalf of the lot owners who have refused consent so that there is a unanimous resolution of all lot owners and thus enabling the plan of subdivision to be amended. 11 Under section 32 of the Subdivision Act 1998, an owners corporation may amend a subdivision if there is a unanimous resolution of members. Under Section 34D of the Subdivision Act 1998, the members of an owners corporation may apply to VCAT for an order consenting on behalf of the members who have refused to consent to the resolution. Section 34D(3)(c) sets out what VCAT must consider before making the order consenting on behalf of the non consenting members. It provides as follows: (3) The Victorian Civil and Administrative Tribunal must not make an order on an application under sub-section (1)(b) unless it is satisfied that- (c) the member has or members have refused consent to the proposed action and- (i) more than half of the membership of the owners corporation having total lot entitlements of more than half of the total lot entitlement of the members of the owners corporation consent to the proposed action; and (ii) the purpose for which the action is to be taken is likely to bring economic or social benefits to the subdivision as a whole greater than any economic or social disadvantages to the members who did not consent to the action. 12 The applicants have established that members have refused to consent and more than half of the membership consent to the resolution. The issue for determination is whether there is any economic or social disadvantage to the non consenting members and that disadvantage is greater than the economic and social benefit to the whole of the subdivision. The first respondent s grounds of opposition 13 The first respondent Corowa Central Pty Ltd is the only lot owner who continues to make an active objection to the resolution. In principle, Mr Boothroyd agrees with the resolution to create further owners corporations to reflect the cost centres. However, instead of three cost centres, Mr Boothroyd argues there should be four cost centres so that the eight ground floor lots are treated separately from the lots in floors 1 to 11 in 34 Queens Road, Melbourne. Mr Boothroyd did not produce any evidence of support VCAT Reference No. OC646/2013 Page 5 of 7
from any of the other lots in 34 Queens Road Melbourne. The other five ground floor lots voted in favour of the resolution. 14 The basis of the argument to create a fourth cost centre is set out in an email by Mr Boothroyd to Shelley Freeman dated 23 April 2012 which reads as follows: Possible change to Plan of Subdivision I note you have been appointed to discuss the above matter with owners at 34 Queens Road and I thought I should explain our position as owners of three ground floor units. At the present time, we contribute to the cost of running the lift, cleaning the upstairs corridors and central heating, none of which the ground floor units benefit from. Accordingly, if we were to vote in favour of a change to the Plan of Subdivision on the basis outlined in the February minutes, it would only be on the understanding the ground floor units are members of OC1 but not of OC3. I might add this approach is used throughout all similar owners corporations managed by us and should have been implemented at the time the Stanhill plan was being formulated. The separation between 33 & 34 is quite logical and well overdue. 15 Mr Boothroyd argues that a. The ballot should have given the lot owners the option to create four cost centres and not three and; b. It is not fair to require the ground floor units to contribute to the hydronic heating and the lift and; c. That the owners corporation should take the opportunity to keep up with modern practices so that the ground floor commercial units are treated separately from the residential sections in floors 1 to 11. 16 Mr Griffiths representing all of the applicants and Mr Mermelstein argued in response: a. It had never been put to the Owners Corporation that there should be a fourth cost centre. Instead, the Owners Corporation understood that Mr Boothroyd was seeking a lower lot liability for the ground floor units or not to be part of the proposed Owners Corporation 3. The proposed resolution maintains existing lot entitlement and liability. Mr Mermelstein argued that Mr Boothroyd is not prevented from putting a resolution by ballot to the lot owners seeking a fourth cost centre in the future. Any such ballot must be supported by 25 per cent of the lot owners. b. It is agreed that there is no hydronic heating in the ground floor slab, but the ground floor lots would enjoy some heat from the first floor slab. The lifts are required for maintenance workers to access the roof to maintain the roof and the water boilers which are for the benefit of the whole of the building. Further, it was argued that Mr Boothroyd s lots VCAT Reference No. OC646/2013 Page 6 of 7
have greater use of the foyer and the WC located on the ground floor. In addition, the Owners Corporation provides hot water to all the lots. It was argued that these matters would have been taken into consideration when the plan of subdivision was prepared in 1979. c. That levels 1 to 11 contain mixed residential and commercial lots and there should be no distinction between ground floor and upper level lots. Findings on respondent s contentions 17 The first respondent s application to order the Owners Corporation to put a notice of ballot to lot owners to create a fourth owners corporation is refused for the reason that there is no evidence of any support for the resolution by any other lot owner. In the absence of at least 25 per cent of lot owners (by entitlement) supporting the resolution, the Owners Corporation is not obliged to ballot the members. 18 In considering whether or not to grant the application the Tribunal is not required to determine whether the current regime of lot liability is fair or creates disadvantage. The Tribunal must consider whether the proposed resolution creates any social or economic disadvantage to the non consenting members. The resolution maintains current regime. It does not create any social or economic disadvantage. In any event, there is insufficient evidence for the Tribunal to conclude that the current regime is unfair or disadvantageous to any lot owner. The apportionment of lot liability appears to be based on area. The ground floor lots are slightly smaller than their equivalent lots on the upper floors, so the ground floor contribute a lesser amount towards owners corporation costs. Conclusion 19 I find that the proposed amendment to the subdivision will bring economic and social benefit to the subdivision as a whole. The proposed amendment has no adverse social or economic impact upon the non consenting members. The proposed amendment maintains the current regime of lot liability. The Tribunal is satisfied of the matters to which Section 34D(3)(c) requires it to be satisfied before making the order sought. The Tribunal proposes to make the orders sought in the amended points of claim. MEMBER L. ROWLAND VCAT Reference No. OC646/2013 Page 7 of 7