The Law Handbook 2024

606 Section 6: Houses, communities and the road property or services. ‘Initial owner’ means the person who was the applicant for the registration of the plan of subdivision (s 68(5)). The amended OC Act fails to consider that an existing owners corporation, either limited or unlimited (defined in the Subdivision Act), may be totally purchased for refurbishment or redevelopment. In such circumstances, section 68(4B)(b) does not apply as the developer is not the initial owner. However, the duty to act in good faith does apply as the developer is the owners corporation. A developer should be wary that it could be sued by the owners corporation if it acted contrary to its obligations under the OC Act. A developer, a manager or former manager, an occupier or former occupier of a lot, or a mortgagee may commence legal proceedings to resolve an owners corporation dispute (s 163), provided the action is commenced within six years. A 99-year lease with regular market rent reviews is valid. The fee could be nominal if the lease is non- discriminatory and is applicable to all lot owners, such as the use of common property for the parking of vehicles. Dispute resolution The dispute resolution provisions in 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 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 unless the complaint relates to something done by the manager on behalf of the owners corporation or committee. A complaint cannot be made about a personal injury. A complaint can no longer be made to an owners corporation in relation to the recovery of any fees, charges, contributions or amounts owing to the owners corporation. Under section 153, the owners corporation must respond to a complaint under section 152 in three ways: i it may provide a notice to rectify a breach (s 155) followed by a final notice (s 156) and ultimately, an application to VCAT; ii it may decide to take no action; or iii it may apply to VCAT for an order requiring the person to rectify the breach. A person may formally request the Director of Consumer Affairs Victoria ( CAV ) (see ‘Contacts’ at the end of this chapter) 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, buyer and manager (s 161). 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 buyer or insurer can complain to CAV but not to VCAT, whereas the reverse applies to a former occupier or 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). However, in 2016 the Supreme Court ruled that an owners corporation can apply directly to VCAT (i.e. without first going through the dispute resolution process) if the respondent fails to make a complaint. This decision appears to have been made incorrectly; it is difficult to imagine a circumstance where a lot owner would make a complaint about themself. VCATmay 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). 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.