A recent judgment in the Supreme Court of Victoria dealt with the interesting question of the difference between a dwelling and commercial short term accommodation.

The issue arose following a determination of the Building Appeals Board (BAB) on the use for short term accommodation of apartments at ‘Waterview Walk’ in Melbourne Docklands. The municipal building surveyor (MBS) issued notices against the owners of the units in question as a result of allegedly contravening the occupancy permit for the apartments.  The unit owners contested the validity of the building order issued by the MBS.

In essence, the occupancy permit related to ‘Class 2’ buildings under the Building Code of Australia – that is, a building containing two or more sole-occupancy units each being a separate dwelling.

The other unit owners in the apartment complex were concerned about the impacts on their amenity resulting from the short term rental of the units in question – including increased security issues, damage to common property, frequent parties involving large groups of young people not staying at the apartments and so on.

The BAB concluded that the use of the apartments for commercial short term stays was not a use that was permitted under the existing occupancy permit.  The operation of such a use within a Class 2 building was deemed and change in use a therefore required a new occupancy permit.

The BAB stated:

“The current use of the subject apartments is very different to what would usually be the case under a tenancy agreement eg under a tenancy agreement, there are usually no check in and check out times, no limit on visitors, no daily rates to occupy the apartments, the time for commencement of the tenancy agreement is usually between business hours, referees are normally requested, the stay is generally longer than 30 days, a security deposit is required to be deposited with the Residential Authority and not the landlord etc”

The BAB affirmed the decision of the MBS.

The owners of the units used for short term accommodation then took the matter to the Supreme Court.

The Court considered the definition of dwelling in some detail and concluded that the BAB had erred in law.  Amongst other things, the judgment noted that:

  • the BAB misconstrued the Building Code when it introduced temporal requirements to the meaning of the word ‘dwelling’;
  • the building satisfied the requirements of a Class 2 building;
  • there was no evidence of any changed use of the building;
  • the building was not of itself a danger to people.

The judgment concluded that:

“..it is not the function of this Court, on judicial review proceedings, to express a view one way or the other about the desirability of apartments, in apartment complexes, being let out for short term use.  The function of this Court is to identify whether an error of law on the face of the record or jurisdictional error has been committed by the tribunal below, and then to make orders accordingly.

I have little doubt that if there are true safety issues in respect of the short term occupancy of apartments in multi-storey complexes, then those issues are capable of being dealt with on a number of different levels by a number of different regulatory authorities.  The short point in the present case is that any such identified difficulties are not dealt with according to law if the solution involves torturing and misconstruing the provisions of the Building Code.”

The decision of the BAB was quashed and the case has been remitted for re-hearing and determination by a fresh panel of the BAB.

It will be interesting to see if any legislative or regulatory changes result from outcomes of this matter.

Click here for a full copy of the original BAB determination and here for the Supreme Court judgment.