A recent webinar looked closely at the dispute resolution process in Victoria. Living in owners corporations often involves people sharing common property and spaces, which can naturally lead to differing views and potential disputes. Effectively addressing conflict is particularly important because owners corporation disputes frequently involve residents who must continue to live in proximity after the dispute is resolved. Fortunately, in Victoria, established processes are in place to assist with handling and resolving these kinds of disputes. A recent webinar featuring Joel Chamberlain, Director of Strata Operations at Horizon Strata Management Group, and Phillip Leaman, Principal Lawyer at Tisher Liner FC Law, provided insights into the dispute resolution process in Victoria, drawing on the legal framework and practical experience.
VIC: Resolving Strata Disputes: A Practical Guide for Owners Corporations
For dispute resolution in Victoria, first avoid or de-escalate
The legal framework for dealing with owners corporation disputes in Victoria is primarily covered in Part 10 – Dispute Resolution and Part 11 – Applications to VCAT of the Owners Corporations Act 2006, as well as Clause 7 of the Model Rules for an owners corporation and any registered additional rules. Part 10 sets out how to receive, address, and deal with a dispute initially, while Part 11 focuses on applications to VCAT. Philip Leaman noted that Section 152 of the Act deals with complaints between a lot owner, occupier, or manager regarding alleged breaches by another lot owner, occupier, or manager, but importantly, Section 152 does not apply to breaches by owners corporations.
A key takeaway from the webinar is the emphasis on avoiding disputes or cutting them off before they escalate. Joel Chamberlain suggested that while formal processes exist, a majority of disputes can be avoided or at least de-escalated. He estimated that 80% of the time disputes can be resolved with a few simple steps that avoid initiating formal action under Part 10 or 11. However, about 20% of the time, a dispute might be very serious, a repeat issue, or require formal action.
Before resorting to formal processes, practical steps recommended include:
- Using a humanised interaction like a direct phone call or email.
- Sending a softer version of a formal breach notice – a letter notifying the party of the observed activity in breach and stating the rule, suggesting they cease the activity, and warning that formal process may be initiated if they don’t comply. This approach avoids being overly direct initially.
- If the alleged party in breach is an occupier (like a tenant), it is important to notify the lot owner and potentially their managing agent early, as they may be able to assist in resolving the issue directly with the tenant. Agents can be helpful in addressing tenant behaviour.
VCAT – the last resort
If informal steps fail, the formal process under Part 10 may be necessary. To trigger the formal process under Section 152, the complaint must be formal and in the approved form. An informal email is not sufficient. The owners corporation has an obligation to provide the approved form if needed. Once a formal complaint is received under Section 152, the owners corporation must decide to take action and follow the Part 10 process, apply to VCAT, or take no action.
The speakers stressed that VCAT particularly prefers that disputes between lot owners be resolved internally through the defined mechanism before applying to VCAT. VCAT should generally be the last resort when all else has failed. If the owners corporation decides to pursue action based on a complaint under Section 152, they must provide the person with a Notice to rectify the breach, giving them 28 days to comply. If the breach is not rectified within 28 days, the owners corporation can:
- Give more time to comply.
- Issue a final notice in the approved form, giving a further 28 days to rectify. This notice must state that VCAT action may be taken if the breach is not rectified.
- Decide not to proceed with any further action.
The owners corporation must have reasonable grounds to believe the person committed the alleged breach before deciding to go to VCAT. If the owners corporation decides to take no action on a complaint, they must give written notice of their decision to the complainant and set out the reasons why. These reasons should be reasonable and properly thought through. If the owners corporation is aware of a breach but has not received a formal complaint under Section 152, they have the ability under Section 153 to take action or apply to VCAT without necessarily issuing formal notices first.
What do the model rules say about the dispute resolution process?
The dispute resolution process set out in the model rules (Clause 7) involves:
- The party making the complaint preparing a written statement in the approved form.
- Notifying the grievance committee (or the owners corporation) of the dispute.
- The parties to the dispute meeting with the grievance committee or the owners corporation to discuss the dispute within 28 days of the notice.
- The meeting being in person, by phone, or video conferencing. Video conferencing can be useful to avoid confrontation.
- Parties being entitled to appoint someone to act or appear on their behalf.
- The grievance committee potentially obtaining expert evidence to assist.
If the dispute is not resolved through the internal process, the owners corporation must notify the parties in writing of their rights to take further action under Part 10 of the Act.
Common questions about dispute resolution in Victoria
During the Q&As, we covered some Common questions about dispute resolution:
- A distinction exists between the owners corporation (the legal entity) and the committee (a group elected to make decisions on behalf of the owners corporation). Decisions are ultimately the owners corporation’s, and disputes are typically pursued against the owners corporation itself, not the committee members personally, unless there is a breach of statutory duties.
- If there is no active owners corporation committee or manager, it is strongly advised to get one. Managers can act as a neutral party, provide guidance, and handle complex issues.
- A committee can authorise a manager to issue a breach notice for an evident breach of the rules even in the absence of a formal complaint form, acting under Section 153. However, informal steps are still preferable first.
- If a complainant refuses to participate in a grievance meeting, the owners corporation should document attempts to schedule the meeting. After attempting a reasonable number of times (e.g., three), the owners corporation can decide not to take further action and inform the complainant that they are free to pursue other avenues available to them under the Act. If the alleged breacher refuses to attend, the owners corporation should set a time for the meeting, hold it, and make a decision based on the information available.
- There is no specific time limit stipulated by the Act for issuing a final breach notice after the initial 28 days expires, but it should be done within a reasonable timeframe, not months later.
- Notices can be emailed, provided there is an email address for service.
Conclusion
Finally, both speakers emphasised that the first step in any dispute is simply to have a discussion with the other person involved. If a manager is impartial, they can help facilitate this discussion. Many disputes resolve when people feel they have been heard. Personality conflicts are often a significant cause of disputes, highlighting the need to find ways to live together harmoniously where possible. Consulting with a lawyer is advisable if you are unsure about how to proceed, as interpreting legislation can be complex.
Phillip Leaman Tisher Liner FC Law E: ocenquiry@tlfc.com.au P: 03 8600 9370
Joel Chamberlain Horizon Strata Management Group E: joel.chamberlain@horizonstrata.com.au P: 03 9687 7788
Presentation slides
Download the slide pack: Dispute Resolution Process in Victoria
This post appears in Strata News #743.
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