J&G Knowles and Associates Pty Ltd (ACN 005 219 572)

Australian Business Point Pty Ltd (ACN 007 116 761)

The Carindale Land Company Pty Ltd (ACN 010 860 947)

Cedar Property Investments Pty Ltd (ACN 139 790 748)

Barintore Nominees Pty Ltd v Owners Corporation Plan No SP22934S (Owners Corporations) (No 2) [2019] VCAT 1853

1. Pursuant to s 34D(1)(a) of the Subdivision Act 1988 (Vic) ('Act'), Owners Corporation No SP22934S ('OC') is required to do the following:
   • (a) amend the current registered plan SP22934S ('current plan') to:
     • (i) dispose of the fee simple in parts of the common property in the current plan ('common property');
     • (ii) alter the boundaries of the land affected by the current plan;
     • (iii) reduce the numbers of lots affected by the current plan;
     • (iv) create new lots and new common property;
     • (v) create and name owners corporations and specify the land to be land affected by those new owners corporations and specify lot entitlement and liability in relation to those owners corporations' property;
     • (vi) dissolve itself upon disposal of all of the common property;
     • (vii) create a new easement; and
     • (viii) create, alter or extinguish lot entitlement or liability as necessary because of the exercise of the other powers under s 32 of the Act;

in accordance with the draft plan dated 22 May 2019 (Version C) ('new plan'); and

(b) effect transfers of any parts of common property no 2 and common property no 3 as shown on the new plan to or from other lots on the new plan required in order to give effect to paragraph 1(a) of this order ('follower transfers'), including doing all things necessary to enable registration of the new plan and follower transfers, such as:

• (i) signing any necessary transfers of land, or obtaining any required mortgagee consents; and

• (ii) making duplicate certificates of title available at Land Registry Victoria;

(c) enter into any necessary agreements, deeds, applications, forms or other documents as may be necessary to:

• (i) facilitate certification and registration of the new plan; and

• (ii) otherwise give effect to the matters set out in paragraphs 1(a) and (b) of this order;

(d) take all necessary steps and to do all necessary acts and things so as to give effect to paragraphs 1(a) to (c) of this order and to do anything and everything necessary or convenient to give effect to paragraphs 1(a) to (c) of this order including:

• (i) to respond to any questions, concerns, requisitions or requests to amend of the new plan required by the Registrar of Titles ('Registrar') in order to secure registration of the new plan; and

• (ii) to amend the new plan if so required by the Registrar in order to secure registration and to effect follower transfers in accordance with any such amended new plan provided that any such amended new plan is substantially in accordance with the new plan the subject of paragraph 1(a) of this order;

(e) in accordance with s 11 of the Owners Corporations Act 2006 (Vic), delegate all necessary powers and functions required to give effect to paragraphs 1(a) to (d) of this order to the second applicant acting at its own expense, including signing such applications, forms or other documents and doing all other things (including appointing the applicants' solicitors to act on behalf of the first respondent) as is necessary; and

(f) upon application by the applicants, any officer of this Tribunal is permitted to sign any necessary instrument of transfer, application form or consent on behalf of any party to this proceeding in the event that the party refuses to sign an instrument of transfer, application form or consent after 7 days of a written request being made to a party.

1. Pursuant to s 34D(1)(b) of the Act, the Tribunal consents, on behalf of those members of the first respondent who have not consented to the matters described in paragraph 1 of this order, so that there is now a unanimous resolution of all members of the first respondent to amend the current plan in accordance with the new plan.
2. Pursuant to s 34D(1)(c) of the Act, the Tribunal consents on behalf of each person whose consent is required under s 22 of that Act to the registration of the new plan.
3. Pursuant to s 34F of the Act, the Registrar is directed to dispense with the delivery of any certificate of title or duplicate instrument or other document required to give effect to paragraphs 1 and 2 of this order.
4. The applicants and the respondents (other than the Registrar) must execute any instrument or other document required to be lodged with or given to the Registrar for the purposes of affecting the registration of the new plan.
5. If it is necessary that any party to this proceeding execute an instrument or other document required to be lodged with or given to the Registrar for the purposes of affecting the registration of the new plan and that party does not do so within 14 days of a letter being sent by the applicants' solicitors enclosing the instrument or document and requesting its execution and return, the applicants' solicitors may:
   • (a) make and file an affidavit stating that the instrument or document is required to be lodged with or given to the Registrar and that they have not received the instrument or document within the 14 days if that be the fact; and
   • (b) present the transfer to a registrar of this Tribunal who will by reference to these orders and the affidavit filed under paragraph 6(a) execute the instrument or document and redeliver it to the applicants' solicitors for the purpose of them lodging or giving it to the Registrar;

and the instrument or document executed in accordance with paragraph 6(b) of this order operates as if it had been executed by the party originally requested to execute it.

1. There is no order as to costs as between the applicants and the Registrar.
2. Costs otherwise reserved.
3. Liberty to apply.

Mr J Delany QC with Mr R Peters of Counsel, instructed by Arnold Bloch Leibler

Mr R Young of Counsel instructed by Hercules Constan

Mr D Maddocks director and secretary of the Eleventh Respondent

For the Twenty-sixth to the Thirty-first Respondents

Mr J Karkar QC with Ms E Peppler and Ms R Burd of Counsel, instructed by Howard Bear Legal Consulting Services

1. The applicants are lot owners on registered strata plan 22934S, being the current plan ('current plan') for the mixed use complex at 26-34 Church Street, Brighton ('subject land'). The current plan was registered on 15 November 1985.
2. The first respondent is Owners Corporation Plan No SP22934S ('OC'). The other respondents are lot owners in the complex. The Registrar of Titles ('Registrar') is also a party to the proceeding.
3. Following a ballot of owners in June 2019, the applicants apply to the Tribunal under ss 34D(1)(a) and (c), and 34F of the Subdivision Act 1988 (Vic) ('Act') for orders requiring OC to amend the current plan, effect transfers of parts of the common property, and do all things necessary to facilitate certification and registration of a new plan of subdivision dated 22 May 2019 ('new plan') prepared by Alan David Norman, licensed surveyor. The applicants also seek an order under s 34D(1)(b) consenting on behalf of each person whose consent to the registration of the new plan is required under s 22 of the Act.
4. Following notification of the application, the 26th-31st respondents ('Amyoun parties') appeared and support the application. Warwick Steven Abbott and Nicole Deborah Abbott, the 19th and 20th respondents, appeared and oppose the application. Derna Jean Sanderson, the 25th respondent, also appeared and opposes the application. Miralem Basic, the 15th respondent, filed a statement of grounds opposing the application, but did not appear at the hearing. David James Maddocks, director and secretary of Cemgos Pty Ltd ('Cemgos'), the 11th respondent, filed two affidavits and appeared at the hearing. Although Cemgos voted in favour of the new plan in the ballot, Mr Maddocks proposed an alternative scheme of lot entitlements and liabilities. The Registrar commented on the proposed relief sought by the applicants but did not appear at the hearing.
5. Following the Registrar's comments, the orders sought by the applicants were amended unopposed on the first day of the hearing.

1. The subject land has an area of 8,772 m2 according to the parent title. It is partly zoned Commercial 1 ('C1Z') and partly zoned General Residential Zone - Schedule 2 ('GRZ2') under the Bayside Planning Scheme ('planning scheme'). It is also subject to Design and Development Overlay - Schedule 11 ('DDO11') and the Development Contributions Plan Overlay ('DCPO1') under the planning scheme. The Bayside City Council ('Bayside') is the responsible authority.

(a) the Dendy Plaza Shopping Centre ('Dendy Plaza') (lots 23-48 on the current plan), the public underground car park servicing the Dendy Plaza (lot 111 on the current plan) and 13 outdoor car parks (lots 49-61 on the current plan);

(b) common property servicing the Dendy Plaza and associated car parking;

(c) 12 professional suites fronting St Andrews Street (lots 1-12 on the current plan);

(d) 10 apartments fronting Wells Street (lots 13-22 on the current plan);

(e) underground car parking associated with the professional suites and apartments (lots 62-110 on the current plan); and

(f) common property servicing the professional suites and apartments.

1. There are 111 lots and common property shown on the current plan. They have a total lot entitlement and liability of 2,080. Each unit of lot entitlement is entitled to one vote if a poll of owners is taken.[1] Annual fees including fees relating to repairs, maintenance and other works are determined on the basis of lot liability,[2] as are special fees and charges to cover expenditure. However, if extraordinary items of expenditure are undertaken wholly or substantially for the benefit of some, but not all of the lots, the fees must be levied on the basis that the owner of a lot that benefits more pays more.[3]
2. Since 1985, there have been two informal committees of owners, the Commercial Committee and the Unit Committee for professional/residential owners.

1. Barintore Nominees Pty Ltd ('Barintore'), the first applicant, is the owner of lots 72-74, and 83-88 on the current plan, and has a lot entitlement of 36 (1.73%). J & G Knowles and Associates Pty Ltd ('Knowles'), the second applicant, is the owner of lots 23-24, 26-29, 31-34, 39-48, 51-58, 60-61, and 111 on the current plan, and has a lot entitlement of 877 (42.16%).
2. The Amyoun parties are the owners of lots 25, 30, 35-38, 49-50 and 59 on the current plan, giving them a lot entitlement of 191 (9.18%).
3. The applicants and the Amyoun parties collectively are the owners of the Dendy Plaza, and all of the underground and outdoor car parking relating to the Dendy Plaza. In total, they have 53.07% of all lot entitlements under the current plan.
4. The remaining lot entitlements are held by the owners of the professional suites, apartments and associated underground car parking.
5. Mr and Mrs Abbott, Ms Sanderson and Mr Basic ('objectors') each have 52 (2.5%) of the lot entitlements and liabilities, giving them a total of 7.5%.

1. In terms of OC's current liabilities, as of 24 September 2019:

(a) commercial owners had outstanding liabilities of $10,016.80 (mainly GST) and a surplus of $349 in respect of liabilities to trade creditors; and

(b) professional/residential owners had outstanding liabilities of $5,912.16 (mainly GST and levies paid in advance) and a surplus of $2,396 in respect of liabilities to trade creditors.

1. On 25 March 2019, I appointed a manager to OC for the purpose of conducting a ballot of owners on resolutions to register the new plan.[4]
2. I found:
   • (a) the governance and affairs of OC were in a state of disarray and non-compliance with the OC Act. Corporate governance and administration of OC have failed comprehensively;
   • (b) OC does not have an elected committee, and has not had one for many years. There is no chairperson, secretary or manager;
   • (c) despite requests, OC has not conducted an annual general meeting ('AGM') since 2000;
   • (d) the owners are parties to lengthy and complex proceedings in the Supreme Court of Victoria.[5] There are continuing disputes about OC's rules;
   • (e) the current state of affairs affects all owners, and is likely to adversely affect lot values, as prospective purchasers would be reluctant to become involved in an owners corporation in such a parlous state; and
   • (f) steps must be taken to restore corporate governance to OC, and to bring its affairs into compliance with law.[6]
3. None of these findings were disputed at the hearing.

1. The new plan was prepared by Mr Norman on the applicants' instructions. Its effect was described by the applicants in their submissions:

(a) to wind up OC and create two new unlimited owners corporations (OC2 and OC3) and an additional limited owners corporation (OC1);

(b) to split the existing common property into separate common property for OC2 and OC3 with no common property for OC1;

(c) the owners of the professional suites and apartments are to be the members of OC2;

(d) OC2 will own, and be responsible for the OC2 common property (including the air space above) as the common property for the professional suites and apartments;

(e) the boundaries of the professional suites and apartments (lots 1-22) as shown on the current plan are unaltered;

(f) existing lots 23-48 and 111 on the current plan will be amended by the new plan to accord with the existing built form of the Dendy Plaza and current site conditions, and reconfigured as new lots 23A-31A, 35A-46A and 48A;

(g) the boundaries of the existing Dendy Plaza outdoor car park are unchanged;

(h) OC3 will own and be responsible for the OC3 common property (including the air space above) as the common property for the Dendy Plaza;

(i) the owners of the lots in the Dendy Plaza are to be the members of OC3 (presently the applicants and the Amyoun parties);

(j) the members of OC2 will have no rights, responsibilities or ownership in relation to OC3 common property, and vice versa;

(k) the owners of all lots shown on the new plan are members of OC1;

(l) the purpose of OC1 is limited to the management of common or shared services within the subject land. While the location of the shared services is not shown on the new plan, they are described in a schedule to the new plan as including but not limited to electricity, water, sewer, drainage, telecommunications and firefighting, which service the lots affected by both OC2 and OC3;

(m) a new easement (E-5) is created to provide for footway access to the professional suites and apartments (lots 1-22) from the rear courtyard gate of the common property of OC2 through the common property of OC3 to Wells Street; and

(n) the lot entitlements and liabilities of the professional suites and apartments in OC1 and OC2 remain unchanged from those listed in the current plan. The total entitlement and liability values for OC1 remain the same as in the current plan, with the amount of entitlement and liabilities previously allocated to lots 23-48 reapportioned among new lots 23A-31A, 35A-46A and 48A based on the modified lot area as shown in the new plan.[7]

1. The ballot of owners voted on five resolutions:
   • (a) Resolution 1 related to the amendment of the current plan by the new plan;
   • (b) Resolution 2 related to the execution of transfers of parts of OC's common property to give effect to Resolution 1 and enable registration of the new plan;
   • (c) Resolution 3 concerned the agreements, applications and other documents needed to facilitate the certification and registration of the new plan and to give effect to Resolutions 1 and 2;
   • (d) Resolution 4 related to the implementation of Resolutions 1 to 3, and provided authority to respond to questions, concerns, requisitions or requests to amend the new plan required by the Registrar, and to amend the new plan if required by the Registrar to secure registration; and
   • (e) Resolution 5 concerned the delegation to Knowles of the powers and functions necessary to give effect to Resolutions 1 to 4, including signing applications, carrying out necessary steps and appointing the applicants' solicitor to act on OC's behalf.
2. Owners were assisted in the ballot by an information memorandum prepared by the applicants which outlined the reasons and purpose of the ballot. They were also given written notice of the ballot, instructions on how to vote, and a ballot form.
3. The ballot was conducted in accordance with the Tribunal's orders. There is no dispute about the resolutions, procedure or conduct of the ballot.

1. Owners strongly endorsed the new plan in the ballot. Owners representing 83.75% of lot entitlements voted in favour of Resolutions 1 to 4. The applicants and the Amyoun parties supported these resolutions. All 10 of the professional suite owners who voted supported these resolutions. Five apartment owners also supported these resolutions. Three apartment owners voted against these resolutions.
2. The owners representing 91.25% of lot entitlements cast votes in the ballot. This was an excellent response by owners. A clear majority of each class of owners supported the resolutions, with the commercial owners unanimously in support.
3. The only owners to vote against Resolutions 1 to 4 were the objectors,[8] amounting to a combined lot entitlement of 7.5%.
4. Four owners with a combined lot entitlement of 8.75% did not vote. They were:

(a) Ilic Instalment Pty Ltd, the fifth respondent and owner of lots 4 (professional suite) and 107 (car park);

(b) The Carindale Land Company Pty Ltd, the ninth respondent and owner of lots 8 (professional suite), 70 and 71 (car parks);

(c) Nicholas David Johnstone, 17th respondent and owner of lots 16 (apartment), 95 and 96 (car parks); and

(d) LA & SJ Roach Holdings Pty Ltd and PA Roach Holdings Pty Ltd , 21st and 22nd respondents, and owners of lots 19 (apartment), 79 and 80 (car parks).

1. The result for Resolution 5 was the same as for Resolutions 1 to 4 with one exception. Verna Anne Cook, a solicitor, and the owner of lots 5 (professional suite), and 62-64 (car parks) voted against Resolution 5 on the basis that she preferred the new plan to be overseen by solicitors who were not retained by the applicants. In total, owners representing 81.35% of the lot entitlements voted in favour of Resolution 5 with owners representing 9.9% of the lot entitlements voting against and owners representing 8.75% of the lot entitlements not voting.
2. In summary, owners voting in accordance with their entitlements gave a very high level of endorsement in the ballot to the implementation of the new plan, and to Resolutions 1 to 5. Resolution 1 required a unanimous resolution of the members if it was to be carried.[9] As a unanimous resolution of owners was not achieved, it was not carried.
3. Resolutions 2 to 5 were all dependent on Resolution 1. Although carried by a majority, they have no effect as Resolution 1 was not carried unanimously.

1. Section 32 of the Act confers power to alter an existing subdivision by unanimous resolution of the members and provides:

If there is a unanimous resolution of the members, an owners corporation may proceed under this Division to do one or more of the following -

(i) all or part of any common property vested in it;

(c) alter the boundaries of any land affected by the owners corporation, whether or not the alteration results in an increase or decrease of the area of land affected by the owners corporation;

(d) increase or reduce the number of lots affected by the owners corporation;

(f) create and name an owners corporation and specify the land to be land affected by that new owners corporation and specify lot entitlement and lot liability in relation to that owners corporation;

(ii) it disposes under this section of all its common property and all the land that it owns;

(i) create, vary or remove any easement or restriction...;

(k) create, alter or extinguish lot entitlement or lot liability in any way necessary because of the exercise of its other powers under this section;

1. Section 33 of the Act confers power to alter lot entitlement and liability and provides:

(1) If there is a unanimous resolution of the members, the owners corporation may apply to the Registrar in the form approved by the Registrar to alter the lot entitlement or lot liability.

(2) In making any change to the lot entitlement, the owners corporation must have regard to the value of the lot and the proportion that value bears to the total value of the lots affected by the owners corporation.

(3) In making any change to the lot liability, the owners corporation must consider the amount that it would be just and equitable for the owner of the lot to contribute towards the administrative and general expenses of the owners corporation.

(1) A member of the owners corporation...may apply to the Victorian Civil and Administrative Tribunal for -

(a) an order requiring the owners corporation to do any of the things set out in section 32 or 33; or

(b) an order consenting on behalf of a member or group of members of an owners corporation to the doing by the owners corporation of any of the things set out in section 32 or 33; or

(d) an order restraining the owners corporation from doing any action under this Act or the regulations.

(2) The Victorian Civil and Administrative Tribunal may make an order on an application under subsection (1)(a) even though there is no unanimous resolution of the owners corporation authorising the action.

(3) The Victorian Civil and Administrative Tribunal must not make an order on an application under subsection (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.

(6) Subject to this section, the Victorian Civil and Administrative Tribunal may make any order it thinks fit on an application under this section.

1. Section 34F authorises the Tribunal to direct or empower the Registrar to dispense with the delivery of any certificate of title or duplicate instrument or other document.

1. In Conroy v Owners Corporation Strata Plan 30438 ('Conroy'), I said as to the construction of s 34D generally:

Section 34D(1)(a) of the Act is not subject to any express limitation. There are no express considerations. Nonetheless, guidance can be obtained from the language of s 32 and s 33 as to the considerations that are relevant to an application made under s 34D(1)(a). Section 33(2) states that "the owners corporation must have regard to the value of the lot and the proportion that value bears to the total value of the lots affected by the owners corporation." Section 33(3) requires that "[i]n making any change to the lot liability an owners corporation must consider the amount that it would be just and equitable for the owner of the lot to contribute towards the administrative and general expenses of the owners corporation." These considerations are also significant at the Tribunal level.

Section 34D(2) provides that the Tribunal may make an order on an application under subsection (1)(a) even though there is no unanimous resolution of the owners corporation authorising the action. Section 34D(2) contrasts with s 32 and s 33 each of which require a unanimous resolution of the members before an owners corporation can exercise the powers conferred by these sections.

There is no reason to assume that the limitations on the exercise of the powers conferred by s 34D(1)(b) and found in s 34D(3) and (4) apply to the Tribunal's power as found in s 34D(1)(a). Counsel for the second respondent did not contend that they did. Not only is such a construction contrary to the principles accepted by Gaudron J in Knight v FP Special Assets Ltd, but there is nothing in s 34D or any other section of the Act that supports such a construction.

I reject the submission of counsel for the second respondent that s 34D(1)(b) should be given primacy over s 34D(1)(a). There is nothing in the Act that supports this submission. The powers conferred on the Tribunal by s 34D(1) are alternative and cumulative. Each should be given its full meaning. Each should be read in accordance with the statutory language conferring the grant, and not be subjected to implied limitations not found in the words of the statute.

This construction of the power contained in s 34D(1)(a) is confirmed when consideration is given to the powers conferred on the Tribunal by s 34D(1)(c) and (d) and s 34D(6). Section 34(1)(c) is subject to the limitations described in s 34D(5). It is not subject to the same limitations as are imposed by s 34D(3) and (4) on the exercise of the jurisdiction found in s 34D(1)(b). Likewise, the jurisdiction conferred by s 34D(1)(d) is not subject to any express limitation and should be given its full meaning. Contrary to the submission of counsel for the second respondent, the imposition of specific requirements on the exercise by the Tribunal of two of the powers in s 34D(1) does not render any subsection inoperative. There is no inconsistency or repugnancy. [10]

1. In Conroy, I also considered the construction of the powers found in s 34D(1)(a)-(d), and said:

The construction of s 34D(1)(a) as a power separate from s 34D(1)(b) is consistent with the other provisions of the Act. Section 34D(1)(c) and (d) are additional powers given to the Tribunal. The language used in s 34D is clear and unequivocal, and is supported by the use of the conjunction 'or' between each of s 34D(1)(a)-(d).

There is no conflict between s 34D(1)(a) and (b), or between these provisions and (c) and (d). The provisions have different work to do. While an application that does not meet the limitations imposed on the exercise of the power in (b) cannot attract the exercise by the Tribunal of that power, the application may nonetheless favourably attract the exercise by the Tribunal of the power in (a) provided of course that the Tribunal after considering all of the relevant considerations is minded to grant the application and exercise the power contained in (a).

While there must be a resolution and vote under s 34D(3) and (4) for the purposes of an application for an order under s 34D(1)(b), there is no similar requirement in the case of an application under s 34D(1)(a). Rather, the existence or non-existence of a resolution or vote in the case of an application under s 34D(1)(a) is a circumstance to be taken into account by the Tribunal when considering such an application.

The power conferred on the Tribunal by s 34D(6) to "make any order it thinks fit on an application under this section" is also wide, but does not authorise the making of orders by the Tribunal which would otherwise contravene the express requirements of s 34D.

As I have said, the powers conferred on the Tribunal by s 34D(1) are cumulative. Each is expressed in different language and has a different task to perform. It is up to applicants to identify in their application which one or more of the powers contained in s 34D(1)(a)-(d) and (6) they seek to enliven, and then to satisfy the Tribunal that they meet the requirements (if any) imposed by s 34D(2)-(6) on the exercise of that power, and that the Tribunal after having considered all relevant considerations should grant the desired relief. [11]

1. In O'Gorman v Owners Corporation RP 018831, the Tribunal noted the serious nature of applications under s 34D(1) and their potential effect on the interests of owners in the existing subdivision:

In considering an application under s 34D(1)(a), the Tribunal should approach the application with caution. The Tribunal should not make an order for altering a plan of subdivision lightly.

The lot owners have a vested interest in the existing plan of subdivision. To change the plan of subdivision may change their rights and obligations. Each plan of subdivision and each application to amend a plan of subdivision will have its own unique set of circumstances. Different considerations will apply in each case. An application to amend an obvious error in a plan of subdivision will involve different considerations to an application where a lot owner seeks to acquire common property. It is for the applicant in each case to establish that the proposal is justified and the Tribunal should make the required order.[12]

1. In Owners Corporation SP24525A v Paolucci, the Tribunal sought to identify relevant factors that should be taken into account when considering an application under s 34D(1)(a).[13] The factors identified were:

(a) the amount that would be just and equitable for the owner of a lot to contribute towards the administrative and general expenses of the owners corporation (s 33(3));[14]

(b) whether more than half of the members of the owners corporation having total lot entitlements of more than half of the total lot entitlement consent to the proposed action (s 34D(3)(c)(i));[15]

(c) whether the owners corporation has had regard to the value of each lot and the proportion that value bears for the total value of the lots (s 33(2)); and

(d) whether 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 (s 34D(3)(c)(ii)).[16]

1. The Tribunal observed that the wishes of the members as a whole were highly relevant[17] and that each amending plan of subdivision had its own unique set of circumstances.
2. In J & G Knowles and Associates Pty Ltd v Owners Corporation RP12247, the Tribunal referred to its power to make orders subject to conditions 'so long as the exercise of it does not amount to changing the non-unanimous resolution into a consent to something different from what was resolved'.[18]
3. In Acapulco Gold Pty Ltd v Wallis, Richards J reviewed the broad powers of the Tribunal and observed that they did not mean that the Tribunal was completely at large. Rather, the Tribunal was required to apply the law and not resort to idiosyncratic notions of fairness and justice.[19]
4. In Button v Khung, the Tribunal described the second test in s 34D(3)(c)(ii) as a comparison test between the economic and social benefits of the proposal to all of the members when weighed against the economic and social disadvantages to the non-consenting members.[20] After assessing the evidence as to the economic and social disadvantages to non-consenting members, the Tribunal concluded that the economic and social benefits to all members clearly outweighed the potential economic and social disadvantages to the non-consenting members.[21]

1. The applicants relied on written submissions and tendered:

(a) five affidavits and exhibits of Lara O'Rorke, solicitor, sworn 27 June, 12 July, 26 July, 30 September and 2 October 2019;

(b) the affidavits and exhibits of Ellie Mason, graduate lawyer, sworn 27 June 2019;

(c) the affidavit and exhibits of Alan David Norman, licensed surveyor, sworn 11 July 2019;

(d) the affidavit and exhibits of Christopher John Daly, solicitor, sworn 12 July 2019;

(e) the expert reports and appendices of David Way, certified practising valuer, dated 17 and 23 April, 11 July and 19 September 2019;

(f) the expert reports and attachments of Paul Webber, structural engineer, dated 2 July and 9 September 2019; and

(g) the expert report and attachments of Rhys Quick, property economist, dated 11 July 2019.

1. The Amyoun parties relied on written submissions and tendered:

(a) the affidavit and exhibits of Shadi Seoud, director, sworn 28 June 2019;

(b) the affidavits and exhibit of Ross Simon Clarke, accountant, sworn 12 July 2019;

(c) the expert reports and attachments of Les Brown, certified practising valuer, dated 12 July and 30 September 2019;

(d) the expert report and attachments of Keith Ross Cameron, solicitor, dated 12 July 2019; and

(e) two volumes of historical documents relating to the complex.

1. Each of the expert witnesses is very experienced. Their qualifications and expertise were not disputed. Only Mr Norman and Mr Brown were cross-examined.
2. The third, sixth and eighth respondents relied on a written submission signed by counsel. The submission drew the Tribunal's attention to relevant provisions of the Act and authority.
3. Mr and Mrs Abbott spoke to written submissions dated 22 July and 29 September 2019 and provided additional documents. Ms Sanderson spoke to a written submission filed 22 July 2019. Mr Maddocks spoke to two affidavits and exhibits sworn 22 July and 26 September 2019.
4. Much of the evidence is undisputed, and was not the subject of cross-examination. There is a substantial amount of documentary evidence.

1. In addition to describing the effect of the new plan,[22] Mr Norman noted the following points:

(a) the shared services were not shown on the new plan as the titles office did not require them to be shown;

(b) delineation of the shared services on the new plan would require excavation and x-ray location at considerable expense to locate ducts and pipes. This was unnecessary and would not alter the fact that the services were shared;

(c) the cost of repairing, maintaining and servicing the infrastructure of the shared services was not expected to be large. Insurance cover for the services and related infrastructure would be provided through OC2 and OC3;

(d) the existing entitlements and liabilities for the professional suites and apartments had not been altered (lots 1-22), the entitlement and liability values for lots 23-48 and lot 111 in the current plan had been reapportioned amongst the new retail lots 23A-31A, 35A-46A and 48A in the new plan;

(e) the E-5 easement would give access to the common property of the residential owners and permit the public to walk directly to Wells Street;

(f) the wheelchair ramp as shown on previous plans was complicated and confusing. It was not depicted on the new plan as it would add an unnecessary complication; and

(g) the new plan adjusts the lot entitlement and liability of lot 61, a retail car park, from 4 to 2 to correct a past mistake.

1. In oral evidence, Mr Norman added:
   • (a) in preparing the new plan he was given instructions to make as few changes as possible, and not to change the professional suites and apartments at all;
   • (b) under the new plan, OC1 is limited to the maintenance of common services while not owning any common property itself. This is because a separation of the subject land into two unlimited owners corporations would not satisfy referral authority requirements if there were still shared services. He expected the referral authorities to be comfortable with the structure shown on the new plan;
   • (c) there is very little cost associated with the running of the shared services on a day-to-day basis unless there is a repair or maintenance issue;
   • (d) the cost of running the fire services was probably nil or close to nil every year;
   • (e) the major costs are those of running the common property including the swimming pool and gardens; and
   • (f) if the wheelchair access ramp were shown on the new plan as an easement, it would remain until formally altered. This would be inconvenient if the ramp altered or there were other changes.

1. Mr Brown described Dendy Plaza as a mixed use retail complex comprising a Coles Supermarket, Palace Cinemas, commercial office suites, residential townhouses, specialty shops and restaurants, and associated basement and at grade parking. By-laws governed the operation of each component of the complex. He described the components of the complex as:
   • (a) professional/residential units and common property, and unit members; and
   • (b) commercial units and common property, and commercial members.
2. A separate committee deals with the affairs of each component and in effect, the subject land was treated as subdivided into the two components.
3. Mr Brown noted that on 15 November 1985, OC adopted by-laws for the current plan. Since then, the whole of the subject land had been treated in two parts, with each part separately administered. A deed to resubdivide the whole of the subject land into professional/residential land and commercial land, and respective common property did not proceed. The Amyoun parties had commenced proceedings in the Supreme Court to register a new plan of subdivision to divide the subject land into its two components.
4. Following inspection of the complex, Mr Brown observed:
   • (a) the professional/residential and commercial components operate separately;
   • (b) there are separate access points to each of the common areas and their basement car parks;
   • (c) there is an access point to the professional/residential common area through a gate to the south of the Dendy Plaza with a keypad lock; and
   • (d) the transfer of common property area within the Dendy Plaza does not impact the use of professional/residential areas.
5. Mr Brown said:
   • (a) the costs associated with the professional/residential suites were paid by the professional/residential owners without financial contribution from the commercial owners;
   • (b) the professional/residential owners' costs were substantially less than those of the commercial owners; and
   • (c) the professional/residential owners made no financial contribution to the operation of the common area associated with the Dendy Plaza.
6. As to the operations of OC, Mr Brown said:
   • (a) from the completion of the development it was always the intention to have separate owners corporations. Separation of OC does not result in any economic deprivation or benefit given that OC always effectively operated this way;
   • (b) technically as it stands, all members of OC have an interest and would be entitled to any gains. However, any gains would be the result of financial contributions. The professional/residential owners have never contributed financially to the operation and expenses of the commercial component. It was not logical that a financial benefit should be obtained by them;
   • (c) OC has not operated within the requirements of the OC Act. This has a potential negative impact on land value if a professional/residential owner decided to sell. In the event of a sale, there was benefit in having the new plan implemented and the affairs of OC split; and
   • (d) as things stand, all owners have a liability and are financially obligated to contribute in the event of an issue, which may not directly affect them.
7. Mr Brown considered that it is beneficial for all owners to have the new plan implemented and the affairs of the complex split legally. The amount of this benefit could not be quantified. In essence, it would implement the intentions of the developer and the lot purchasers as well as formalise the manner in which the affairs of the two committees have been run.
8. The changes to the boundaries within the commercial land to accord with site conditions did not impact on the professional/residential lots.
9. Mr Brown concluded that there was no economic deprivation to the professional/residential owners by the resubdivision proposed in the new plan. The resubdivision would be beneficial to all owners including the professional/residential owners.

1. Mr Brown was asked to comment on Mr Maddocks' affidavits. He said that the assessed common land value of $11,560,000 was incorrect as the common property was encumbered, and its value reduced by site conditions. It was difficult to assign a value for the common property hypothetically in isolation. The common property was not separately saleable. While there may be an opportunity to redesign the car park to achieve additional car parking, the value of any additional space was marginal.
2. The site conditions noted by Mr Brown included:
   • (a) the external area is about 1,650 m2 gross (including privately owned lots) or about 1,100m2 net (excluding privately owned lots);
   • (b) the area was encumbered by various rights of carriageway in favour of adjoining land holdings including six shops fronting Church Street, and an adjoining parcel of land facing Wells Street used as a Council carpark;
   • (c) the majority of this area had easements of way and drainage in favour of adjoining landholdings which would adversely affect land value;
   • (d) the shape of the land is irregular;
   • (e) the eastern wall of the complex incorporates:

(i) five doorways plus an automatic door to the arcade;

(iii) two exhaust stacks serving units within the complex;

1. With over 100 individual lots and numerous owners, Mr Brown said that the subject land was not going to be redeveloped in the short term. It was notoriously difficult to get planning approval for redevelopment in the Brighton area.
2. Mr Brown described the benefits to all owners including the professional/residential owners of the implementation of the new plan as:
   • (a) formalising the present informal arrangements; and
   • (b) removing exposure of the professional/residential owners to potential building issues in the retail sector e.g. the need for a new roof or lift or services issue.
3. He reiterated that there was no economic deprivation to the professional/residential owners given:
   • (a) the removal of their unit liability to pay fees for services and costs relating to commercial areas;
   • (b) the age of the development and the fact that it would be a benefit for them to have their own owners corporation; and
   • (c) that it was the package of arrangements that needed to be considered - not just one issue in isolation.

1. Mr Way said that:
   • (a) air space is not regularly sold in the market despite the fact that it exists in the context of most properties. It is not a readily saleable asset due to the complexities around cost and development;
   • (b) the development of the subject land was potentially curbed by the separate ownership of a number of the Church Street shops; offices above the basement car park; residences along Wells Street and long term leases without redevelopment clauses;
   • (c) the Coles supermarket lease has a requirement for onsite car parking at existing levels until 2038. Any new development would have to create additional car parking to meet planning and market requirements;
   • (d) the subject land and the complex do not have the benefit of demolition clauses allowing a break in the major Coles lease which has a term certain until 2038;
   • (e) the subject land does not have a planning permit for development; and
   • (f) developer purchasers are unlikely to hold and speculate over a 20 year term.
2. Mr Way concluded that the common property of OC was not readily saleable. In coming to this conclusion, he relied on:
   • (a) its limited development potential;
   • (b) the complexity of existing structures and of dealing with their occupants;
   • (c) the existing commercial lease rights;
   • (d) the unknown planning outcomes;
   • (e) the unknown costs;
   • (f) the engineer's advice; and
   • (g) the likely extended development horizon.

1. Mr Way reviewed the area changes within the complex under the new plan. They were:
   • (a) reconfiguration of the common area into lots owned by Knowles;
   • (b) reconfiguration of the common area into lots owned by the Amyoun parties; and
   • (c) reconfiguration of parts of lots owned by Knowles into common areas.
2. The valuation of these areas was subject to critical assumptions:
   • (a) the assessment was a hypothetical valuation of the assumed lots. They were not individually titled and could not be sold. Even if they could, they would have a very narrow market given their size and nature;
   • (b) the purpose of the valuation was to provide a hypothetical assessment of the market value of the combined lots for compensation purposes with each component being part of a larger saleable lot; and
   • (c) the lots were reasonable saleable lots in order to meet the definition of market value, assuming all caveats had been removed.
3. On the basis of these critical assumptions, Mr Way assessed the value of the areas to be transferred using the direct comparison and capitalisation methods and adopting a notional value of $1,000/m2 for ancillary property areas. This calculation produced a total value (excluding GST) of $4,696,000 for the areas to be transferred to Knowles, a total value of $189,000 for the areas to be transferred to the Amyoun parties, and a total value of $2,595,000 for the areas to be transferred back to common property. The net difference in value between the areas to be transferred to and from OC amounted to $2,290,000.

1. Mr Way noted that:
   • (a) it is common for essential services such as wiring, piping and meters to lie within common property;
   • (b) common property is intended to benefit the use and operation of the individual lots within an owners corporation and its members;
   • (c) he had ignored the previous long term lease over the common property, and assumed vacant possession; and
   • (d) the common property may have a market value with vacant possession where all of the lots within the plan of subdivision were in a single ownership and under the control of the owners corporation. This was not the case with the subject land.

1. Mr Way considered the market value of the areas comprising the courtyard adjacent to the Gold Moon restaurant and observed:
   • (a) no title was in place for that part of the subject land;
   • (b) there would be cost in creating a development entity to compare directly to comparable development site sales;
   • (c) planning restrictions would suggest development possibilities were limited to three levels and required a setback from Wells Street;
   • (d) the carpark of the professional/residential units and the basement retail car park is located below a significant part of the courtyard;
   • (e) structural engineering advice indicated restricted development capabilities above the basement carpark due to limited additional structural capacity;
   • (f) further strengthening works of the basement car park may be required and consent required from the professional/residential owners;
   • (g) existing services which facilitate the entire development required potential relocation;
   • (h) the tenant has the right to quiet enjoyment of the existing Gold Moon restaurant lease until 31 January 2025;
   • (i) commercial leases within the Dendy Plaza with options to renew may also be impacted;
   • (j) planning and market requirements for additional car parking would need to be met should there be any development of the courtyard area without access to a basement; and
   • (k) there were rights of access over the courtyard land and parking requirements to be met.
2. Mr Way concluded:
   • (a) there was little evidence that development of the courtyard area was commercially viable until a planning permit was issued, plans endorsed and the development independently costed;
   • (b) the market evidence put forward by Mr Maddocks comprised freehold title development sites which are unencumbered, have subterranean rights and no obligations to surrounding lots. They are not comparable to the courtyard area;
   • (c) the courtyard area was not separately titled and formed part of a common area to a strata titled development with multiple stakeholders;
   • (d) a direct rate of $6,398/m2 was not applicable to the subject land, which was part of a strata plan encumbered below and was without a defined planning outcome; and
   • (e) the courtyard area adjoining the Gold Moon restaurant was not readily saleable and had no identifiable value given:

(i) the limited development potential, and complexity of dealing with the existing structure;

(iv) unknown costs as advised by the structural engineer.

1. Mr Webber reviewed the potential development of the airspace above the complex concluding:
   • (a) the existing structures do not have significant spare capacity to develop the airspace without strengthening works and associated disruption to existing occupiers;
   • (b) the planning height restrictions in conjunction with required strengthening and new works would render development unfeasible;
   • (c) development opportunities to the retail component are only feasible by demolishing the existing centre to at least ground level and possibly to foundation level; and
   • (d) the professional suites have limited development airspace opportunities as they are constructed above the existing retail car park.

1. Mr Webber stated that any valuation is entirely dependent on what physically can be built on the subject land, which in turn is influenced by a number of significant inputs and restrictions including:
   • (a) site dimensions and the unusual geometry and shape of the area;
   • (b) allowable height limits set by planning requirements;
   • (c) the required planning setbacks from neighbouring properties and Wells Street;
   • (d) maintaining access to service the existing centre;
   • (e) limited additional structural capacity; and
   • (f) the need for approvals by the residential owners to any construction above their carpark.
2. Mr Webber said that it is not possible to provide any meaningful valuation of the subject land without first assessing what can actually be built based on all of these criteria. As an expert in structural engineering, it was not possible for him to assist with any meaningful valuation of the subject land until presented with a viable building scheme.

1. Mr Quick, an expert in property economics and research, gave evidence as to the economic and social benefits and disbenefits of the new plan. He observed that there was no direct physical change to the existing building and subject land that would generate economic or social impacts.

1. Mr Quick identified the following economic benefits:
   • (a) Increased capital value of lots: The establishment of a legal owners corporation structure through the new plan can increase property values. Potential purchasers will pay more for the clarity and certainty of a legal and more logical structure.
   • (b) Sustainability: The Dendy Plaza could be more sustainable if the changes reduce costs through increased clarity of ownership and fair redistribution of maintenance costs.
   • (c) Reduced owners corporation fees for professional/residential owners: A simpler structure would reduce costs of enforcing and managing the owners corporation, and remove the risk of exposure to commercial costs for professional/residential owners.
     • (d) Decreased liability for professional/residential owners: In the past, the commercial owners have largely paid for the maintenance and capital improvements of commercial common property although not legally obliged to do so. The new plan would formalise this arrangement, and ensure that professional/residential owners are not liable to pay for the common property that they derive no benefit from.
2. Mr Quick identified one economic disbenefit, namely, that owners of the retail lots may be required to pay higher owners corporation fees. However, these lots also receive the benefit of converting the commercial carpark (unit 111 currently owned by Knowles) to common property, which may be considered to neutralise this disbenefit.

1. Mr Quick identified the social benefits of the new plan:
   • (a) Increased certainty: A simpler legal structure improves certainty around the operation of OC. It helps reduce the potential stress that might arise from the continuation of an unlawful owners corporation.
   • (b) The levying of owners corporation fees in a just and equitable manner: The new plan has the potential to ensure the just and equitable levying of owners corporation fees based on legally compliant owners corporations.
   • (c) Smooth and fair operation of owners corporations: The new plan is more efficient as well as legally compliant, and will remove dysfunction.
   • (d) Increased ability to enforce owners corporations rules: A functional owners corporation structure would ensure greater enforceability of the rules. Currently, OC's rules are not enforced as reflected by the quasi two-tier system and the payment of common area costs by one party that should legally be shared.
2. Mr Quick did not identify any social disbenefits arising from the new plan.

1. Ms O'Rorke reviewed OC's statement of income and expenditure and general ledger extracts for the financial years ('FY') ending 30 June 2017 and 30 June 2018. Her evidence is summarised in Table 1.

Table 1: Owners liability and payments for FY17 and FY18

1. Table 1 demonstrates that in FY17 and FY18, commercial owners paid $280,467.18 more in OC fees than they were legally obliged to do. The professional/residential owners paid the same sum less in OC fees than they were legally obliged to pay.
2. Ms O'Rorke also reviewed OC's records over the period FY12-FY15. Her results are summarised in Table 2.

Table 2: Owners liability and payments for FY12-FY15

1. Table 2 demonstrates that commercial owners paid $344,754.44 more in OC fees for FY12-FY15 than they were legally obliged to do. The professional/residential owners paid the same sum less in OC fees than they were legally obliged to pay.
2. From her review of OC records, Ms O'Rorke concluded that commercial owners had overpaid OC fees by about 20% of the total levies required to be paid by them over the period 1985-2011.

1. In their written submissions, the Amyoun parties noted that since FY09 commercial owners had paid significantly more in levies, and professional/residential owners significantly less than required by the lot liabilities under the current plan. Table 3 sets out the levy payments and liabilities:

Table 3 - Economic benefits received by professional/residential owners as against liabilities:

1. On this basis, the Amyoun parties calculated the total economic benefit provided by the commercial owners to the professional/residential owners over nine years at $1,338,079.

1. Given that the same practices have existed since 1985, it is reasonable to conclude that commercial owners have provided a total economic benefit to the professional/residential owners exceeding $1,338,079.

1. Mr Daly acted for Knowles in the acquisition of the subject land and was involved in the preparation of the current plan for registration on 15 November 1985. He deposed that it was always Knowles' intention to subdivide and develop the subject land for a shopping centre and associated car parking to be owned by Knowles, and to sell the professional suites and apartments and associated car parking to third parties. Once development of the complex was complete, it was intended that the shopping centre and associated car parking would be managed by another owners corporation. However in 1985, it was not possible under the Strata Titles Act 1967 (Vic) ('ST Act') to register separate strata plans and create two separate owners corporations, as there were shared services between the commercial units and the professional/residential units.
2. Mr Daly said that at OC's first AGM on 15 November 1985, the members resolved to repeal the by-laws prescribed by the ST Act and replace them with by-laws prepared by Knowles. These by-laws provided among other things for:
   • (a) the division of the common property shown on the current plan between the professional/residential units and the commercial units;
   • (b) the creation of the Commercial Committee and the Unit Committee for professional/residential owners; and
   • (c) the charging of OC levies in accordance with the division between professional/residential owners, and commercial owners.
3. At the first meeting, it was resolved that Knowles would lease the commercial common property to Manning River Pty Ltd ('Manning River') for 99 years at a peppercorn rent. As Knowles was then the owner of all the units and the common property, it was Mr Daly's view that it had the power to do so.
4. Knowles, Barintore, Manning River and OC executed a lease of the commercial common property on 15 November 1985.
5. Knowles subsequently sold the professional/residential units. In 1991, it sold six commercial units to the Amyoun parties.
6. From the beginning, there had effectively been two informal owners corporations on the subject land. There had been disputes between Knowles and the unit purchasers, and between the unit purchasers themselves.
7. Mr Daly provided extensive details of the efforts made by him to effect resubdivision of the subject land and create two owners corporations:
   • (a) 1991-2: New plans of subdivision were drawn up by surveyors. They did not proceed because of concerns raised by the Amyoun parties;
   • (b) 1993: Mr Daly prepared a number of memoranda to Knowles in relation to the resubdivision. However, there were disputes between the owners and unanimous consent to the resubdivision was not achieved at the AGM on 15 July 1993. Certification of the resubdivision plans by the City of Brighton was not achieved because unanimous consent of the owners was not obtained.
   • (c) 1994: Mr Daly drafted a deed of resubdivision ('resubdivision deed') to be executed by all owners and OC so that OC could operate as a two-tiered structure. He also drafted a maintenance agreement. Some but not all owners signed the deed and agreement.
   • (d) 1995: Disputes as to maintenance issues held up further agreement. An amended resubdivision deed was prepared.
   • (e) 1997: On 8 July 1997, Mr Daly sent a letter to one of the Amyoun parties advising that as all other members of OC had signed or were about to sign the amended resubdivision deed it was required to sign the agreement.
   • (f) 1998: Following execution by the Amyoun parties of the amended resubdivision deed, plans were lodged with Bayside, United Energy Ltd and South East Water. However, the utilities required changes to the plans.
   • (g) 2000-1: Discussion continued with the utilities and a s 173 agreement with South East Water was drafted.
   • (h) 2004-7: Plumbing tests and plans were required by South East Water for the separation of water services. Little progress was achieved.
   • (i) 2008-9: Knowles sought external legal advice as to how to progress the resubdivision. An amended plan of resubdivision was prepared.
   • (j) 2010: Mr Daly retired from working as a solicitor for Knowles, and progress stopped.

1. Mr Clarke has been the accountant for the Amyoun parties since about 1987. In September 1997, he was appointed to the Commercial Committee. He said that since 1987 there had been an effective split between the commercial owners and the professional/residential owners, and an awareness by all parties that the subject land was to be subdivided to formally separate the two parts. The common property was treated as though it belonged to the 'half' that it was situated in.
2. Mr Clarke said that the professional/residential owners had never sought to be involved in the management or upkeep of the commercial common property. The owners of Dendy Plaza did not contribute to the costs of the professional/residential owners and vice versa. If the professional/residential owners were required to contribute to a 'joint' owners corporation with a single budget in accordance with their legal lot liability under the OC Act, they would be much worse off financially than they are currently.
3. As actual separation had existed for decades, Mr Clarke said that the only thing that would change as a result of the new plan would be that the de facto separation of the commercial owners from the professional/residential owners would become formal.
4. Until recently raised by Mr Abbott, it had never been suggested that there should be any compensation to professional/residential owners.

1. Reviewing the financial records of OC for FY17, Mr Clarke noted that a significant proportion of expenditure related to annual running costs and not expenditure that would benefit all of the lots.
2. The running costs included:
   • (a) insurance;
   • (b) management fees;
   • (c) cleaning costs;
   • (d) waste disposal;
   • (e) security; and
   • (f) utilities.
3. In FY17, the professional/residential owners paid $9,565 and the commercial owners paid $46,418 for insurance.
4. In FY17, the commercial owners incurred annual costs including:
   • (a) common area upkeep (about $159,542);
   • (b) waste disposal (about $64,022);
   • (c) security costs (about $130,718); and
   • (d) utility costs (about $50,326).
5. Repairs and maintenance costs for FY17 amounted to $27,043 for professional/residential owners and $56,344 for commercial owners.
6. Mr Clarke said that if the professional/residential owners were liable for 48% of the combined costs, they would incur significantly higher annual fees. He concluded that the professional/residential owners had received a significant economic benefit from the arrangements that had existed since 1985.
7. When considering economic and social advantages and disadvantages of the new plan, Mr Clarke said:
   • (a) he could not identify any benefit that the professional/residential owners would lose if the resubdivision went through;
   • (b) the professional/residential owners had no advantage in relation to the Dendy Plaza that any other member of the public did not have;
   • (c) the Commercial Committee did nothing for the professional/residential owners;
   • (d) there was no disadvantage to the non-consenting owners as a result of the subdivision;
   • (e) there were positives as a result of the legal situation being correct and certain; and
   • (f) all parties would benefit if the time and resources spent on litigation ceased.
8. Finally, Mr Clarke said that the concerns raised by Mr Basic as to height controls and air rights were not raised between 1987 and 2017. They had only been raised in the context of the Supreme Court proceedings and ballot.

1. The Amyoun parties relied on historical documents relating to OC dating back to 1985. While the documents provided are too voluminous to mention individually, it is helpful to identify some themes found in the documentation:
   • (a) From 1985, there were continuing and repeated efforts by commercial and professional/residential owners to achieve legal separation of the Commercial Committee and the Unit Committee;
   • (b) There were many discussions within the Unit Committee as to how separation was to be achieved;
   • (c) Initially, separation was considered not to be legally possible because services were shared between all owners;
   • (d) Later there were delays and difficulties in achieving legal separation, and with referral authorities;
   • (e) The Commercial Committee has always operated separately from the Unit Committee;
   • (f) Commercial owners acting through the Commercial Committee have always paid for the costs and expenses relating to commercial units and common property while professional/residential owners acting through the Unit Committee have paid the costs relating to the professional/residential units and common property;
   • (g) Some sales of professional/residential units took place conditionally upon the registration of a plan of resubdivision intended to achieve separation; and
   • (h) All unitholders at OC's first AGM on 15 November 1985 approved by-laws intended to achieve practical separation of the two committees.

1. The applicants' main submissions were:
   • (a) for decades the complex has been treated as divisible according to its physical boundaries;
   • (b) it was always intended that the position would be formalised;
   • (c) the lot entitlements and liabilities for OC1 are almost identical to those existing under the current plan;
   • (d) there are no disadvantages to the non-consenting owners if the new plan is approved;
   • (e) the objectors have adopted an inconsistent position - they seek an ownership share of the commercial common property but do not undertake to meet its maintenance and upkeep expenses;
   • (f) claims for compensation have not previously been raised;
   • (g) the evidence of the valuers should be accepted, and the values asserted by the objectors rejected;
   • (h) the majority of the professional/residential owners do not contend that they ought to be paid compensation; and
   • (i) the objectors do not explain to whom compensation should be paid or how compensation should be assessed.

1. The main submissions of the Amyoun parties were:

(a) the very high level of support by owners for the new plan should be afforded a great deal of weight;

(i) provide a more certain and appropriate division of title and owners corporations;

(iii) remove the risk of legal liability arising from the current non-compliant situation;

(iv) reduce the financial liability of professional/residential owners;

(v) bring to an end the resources being expended to achieve resubdivision;

(vii) avoid the risk of devaluation of property values.

(c) the only potential disadvantage of the proposal to non-consenting owners is the possible additional running costs caused by the creation of OC1.

1. The Amyoun parties also submitted:
   • (a) the professional/residential owners have never benefited from the commercial common property;
   • (b) there is no evidence that the professional/residential owners ever considered themselves to have any interest in the commercial common property;
   • (c) there is no detriment to the professional/residential owners or to their expectations;
   • (d) over the entire life of the current plan, no owners have ever raised concern about the resubdivision or claimed compensation;
   • (e) the value of the commercial common property to the non-consenting owners is nil;
   • (f) the principles and methodology relied on by the objectors are incorrect; and
   • (g) the new plan will have significant benefits to the subdivision as a whole and will not result in disadvantages to the non-consenting owners that outweigh the benefits.
2. As to lot entitlements and liabilities, the Amyoun parties contended:

(a) the split of entitlements and liabilities between OC2 and OC3 simply reflected the current allocations and historical practice;

(b) there was no change to the total entitlements and liabilities as between the commercial and professional/residential owners; and

(c) the entitlements and liabilities had been set according to the areas of the lots, which was just and equitable.

(a) the common property to be transferred to private property was of considerable value;

(b) the proposal results in the loss of future value of the common property if the subject land is redeveloped;

(c) the common property is to be divided into two defined segments of unequal shareholding without financial consideration;

(d) no financial consideration is offered for airspace;

(e) the lot apportionment of the resubdivided common property has not been altered in accordance with the change in actual land areas; and

(f) the E-5 easement does not give adequate access and the wheelchair ramp should be retained;

1. In her submission, Ms Sanderson raised the following issues:

(a) Knowles had built over common property without approval;

(d) the new plan does not give OC2 control over its common property or divide it from OC3;

(e) the exhaust stacks from the OC3 car park are situated in the common property of OC2; and

1. Mr Maddocks has served on the Unit Committee for many years.
2. He contended that the allocation of entitlements and liabilities for OC1 should be based on the proportions of 33.6% for professional/residential lots and 66.4% for commercial lots. He submitted that the entitlement and liability units for OC2 (lots 1-22) as proposed in the new plan were not consistent with the value of proposed OC3 (lots 23A-48A).
3. Mr Maddocks believed that the proposed transfer of the common property in the external area of the Gold Moon restaurant without compensation was to the disadvantage of the professional/residential owners. Relying on current market land values of $5,361/m² for commercial land, and $6,398/m² for residential land, he said that the applicants would receive a benefit of $11.56 million if they developed this area, resulting in an economic disadvantage to professional/residential owners of $3.57 million.
4. In his second affidavit, Mr Maddocks developed a submission in relation to shared services. He submitted that the OC1 schedules in the new plan should be altered in favour of the professional/residential owners, with the commercial owners paying 90% and professional/residential owners paying 10% of the cost of fire services and some other services.

1. In his statement of grounds, Mr Basic raised four issues:

(a) part of the common property had been altered and changed to private property;

(b) the new plan would give full control over common property to Knowles;

(c) the original building defects have not been addressed; and

(d) there are no height limits over the common property.

1. The issues raised by the parties may be summarised as:

(b) Knowles' occupancy of part of the commercial common property;

(e) the entitlements and liabilities in the new plan;

(h) the economic and social benefits and disbenefits of the new plan to the owners as a whole;

(i) the economic and social benefits and disbenefits of the new plan to the non-consenting owners;

1. The results of the ballot are a compelling statement of the views of owners. A very high proportion of owners according to lot entitlements voted with a clear majority of commercial (unanimous) and professional/residential owners in favour of all resolutions. It is plain that owners generally support the new plan as an acceptable way to proceed.
2. The strong support of owners for the new plan is a powerful reason why it should be approved. It is significant that in supporting the new plan, the majority of professional/residential owners did not seek compensation.
3. For the purposes of s 34D(3)(c)(i), I find that more than half of the membership of OC having total entitlements of more than half of the total lot entitlement consent to the actions set out in the resolutions.

Knowles' occupancy of part of the commercial common property

1. At the time of OC's first AGM on 15 November 1985, Knowles was the owner of all lots under the current plan. At that meeting, a unanimous resolution was passed to lease the commercial common property to Manning River. All other current owners are subsequent purchasers. Over the intervening 34 years, owners have had the opportunity to establish the invalidity of the lease if in fact it is invalid. No owner has done so.
2. As a result, the occupancy arrangements for the commercial common property have been the status quo for a long time. In the absence of the new plan, the current arrangements will continue indefinitely. It cannot be assumed that the Court or the Tribunal would decide that they are invalid.
3. There is much to be said in favour of resolving legal disputes. The new plan resolves the dispute as to Knowles' occupancy of commercial property. This is a real step forward.

1. I accept the evidence of Mr Brown,[23] Mr Webber[24] and Mr Way.[25] The use of market commercial and residential land values to value OC's common property is fundamentally unsound. Unlike land sold on the open market, the common property is not separately saleable. It is irrevocably tied to the land and lots which it supports. It is difficult to assign any hypothetical value to the common property in isolation from the whole property. There is no acceptable basis for doing so in the evidence.
2. I agree with Mr Webber that the adoption of open market land values to assess the value of common property leads to false expectations. It is not possible to make any meaningful valuation of the subject land (other than one based on the summation of the present values of individual properties) until there is a viable building scheme. It is not established that the airspace or existing common areas can be put to more beneficial use in a cost-effective way. There are many obstacles in the path of redevelopment. Any redevelopment proposal immediately faces major difficulties in obtaining owner agreement from numerous owners and a planning permit from Bayside. The existing fragmented ownership and multiple tenancy arrangements are almost impossible to overcome.
3. On the evidence before me it is not possible to determine any specific value for the individual parts of the common property. I find that market values for commercial and residential land are of minimal assistance, as they are derived from the entirely different circumstances of open market sales of unencumbered developable land on separate titles.

1. I accept Mr Norman's evidence that the proposed owners corporation structure is optimal for the subject land. It provides for the effective separation of the affairs of OC2 and OC3. OC1 is necessary because there are shared essential services which need to be maintained. They remain the responsibility of all owners.
2. I also accept his evidence that the expenditure necessary to maintain these services will be insignificant and much less than the expenditure necessary to maintain common property in active use such as the commercial areas within OC3, and the swimming pool and gardens within OC2. Importantly, as he observed, the structure proposed is likely to be acceptable to Bayside and the utilities whose approval is essential if the position is to be regularised.

1. Unit entitlements and liabilities can be determined in different ways. For the subject land, they are determined by the current plan. The current unit entitlements and liabilities have been in place since the complex opened in 1985.
2. Mr Norman spoke of his instructions to make the least possible change to existing entitlements and liabilities. Given the extreme level of disputation and past dysfunction, these instructions are unsurprising, and reflect the view that the new plan could succeed in the ballot only if changes were kept to a minimum.
3. In the event, owners comprehensively supported the new plan, and the unit entitlements and liabilities described in it.
4. In his submission, Mr Maddocks proposed an alternative scheme of unit entitlements and liabilities. This scheme has not been put to owners, and is very different from the new plan which has been strongly endorsed by owners.
5. I find the lot entitlements and liabilities set out in the new plan are just, equitable and reasonable reflecting as they do the proportions that have prevailed for the last 34 years, and which are supported by the great majority of owners.

1. The records of the many meetings conducted by the Unit Committee since 1985 show that professional/residential owners have long agitated for the legal separation of the affairs of the Commercial Committee and the Unit Committee. Achievement of this objective will be the delivery of a long awaited dream. The new plan gives effect to the expectations of owners as confirmed by the ballot result.

1. This is not a case where compensation should be required as a condition of the approval of the new plan. All owners benefit from the approval of the new plan. The new plan will not alter the operations or physical appearance of the complex. The new plan will substantially reduce liability of the professional/residential owners for fees and levies. As I have found, in the past the professional/residential owners have paid less than their liability by over $1.3 million. This has been at the expense of the commercial owners. The professional/residential owners have not in the past contributed to the costs and expenses relating to the commercial property, and have enjoyed no greater rights over it than are enjoyed by members of the public.
2. The arrangements made in 1985 for the lease of part of the commercial common property have been in place for many years and long precede the development of the new plan. They are unaffected by it. There is no proper basis in the evidence for the payment of compensation and no acceptable evidence as to how it should be assessed.

Economic and social benefits and disbenefits of the new plan to the owners as a whole

1. I have considered the economic and social benefits of the new plan to the owners as a whole and any economic or social disbenefits to the non-consenting owners.[26]
2. I accept the evidence of Mr Quick as to the economic and social benefits of the new plan.[27]
3. In my view, the economic benefits to the owners as a whole greatly outweigh any economic disbenefits. Only one disbenefit has been suggested - the additional administrative costs associated with a third owners corporation.
4. Mr Quick did not identify any social disbenefit.
5. I also generally accept Mr Clarke's evidence as to economic and social benefits.[28]
6. I conclude that there are considerable economic and social benefits to the owners as a whole if the new plan is adopted. Most importantly, corporate governance and legality will be restored to affairs generally, and dysfunction brought to an end. There is no doubt that this is an important economic and social benefit for all owners.

Economic and social benefits and disbenefits to the non-consenting owners

1. The economic and social benefits that I have described above apply to all owners including the non-consenting owners. They include the removal of their current legal liability for the costs incurred by OC in relation to the commercial common property. This is a major economic benefit, as at any time, the commercial owners could demand that the professional/residential owners pay for OC's costs and expenses in the proportions set out in the current plan. Under the new plan, owners continue to be responsible for the costs and expenses incurred by OC1 in relation to shared services, but the overall liability of professional/residential owners for costs and expenses will be much reduced.
2. I conclude that the non-consenting owners will benefit from the new plan just as much as the other professional/residential owners. They are not disadvantaged. These conclusions are consistent with the result of the ballot where a majority of both professional and residential owners supported the adoption of the new plan.
3. Finally the new plan achieves or largely achieves the long held aspiration of professional/residential owners to separate from the commercial owners. This aspiration has been acknowledged in the minutes and records of the Unit Committee on many occasions.

1. A number of relevant considerations are to be found in the provisions of the Act. Owners corporations are required to have regard to specified considerations when making application to the Registrar to alter lot entitlements and liabilities under s 33.
2. For the purposes of s 33(2), I have had regard to the value of the lots in the current plan and the new plan and the proportion that that value bears to the total value of the lots affected by the current plan and the new plan. I am satisfied that the new plan is fair and appropriate.
3. Under s 33(3), in making any change to the lot liability, the owners corporation must consider the amount that it would be just and equitable for the owner of the lot to contribute towards the administrative and general expenses of the owners corporation. I find that it is just and equitable for the owners in proposed OC1, OC2 and OC3 to contribute towards the administrative and general expenses of the respective owners corporations in the proportions set out in the new plan.
4. Under s 34D(3)(c)(ii), the Tribunal must be satisfied that the purpose for which the action to be taken is likely to bring economic and social benefits to the subdivision as a whole greater than any economic or social disadvantage to the non-consenting owners. I have given consideration to the economic and social benefits to the subdivision as a whole and consider that they clearly outweigh the economic and social disbenefits to the non-consenting members.
5. Under s 41B(a), in determining an application such as the present, the Tribunal is required to take into account any relevant planning scheme. I have taken into account the provisions of the planning scheme as they affect the subject land. It was not suggested that other considerations listed in s 41B were relevant.

1. Mr Norman explained the position in relation to easement E-5 as shown in the new plan. Its purpose is to provide access directly onto Wells Street for residential owners.
2. The wheelchair ramp would add an unnecessary complication if depicted on the new plan. If the ramp were shown as an easement on the new plan, it would remain on title until altered. Formal recognition of the wheelchair ramp as suggested by the objectors would be problematic and likely present unnecessary complications in the future.
3. I accept Mr Norman's evidence as to easement E-5 and as to the wheelchair ramp. This is a standard requirement. His design approach is appropriate and consistent with sound practice. A level of flexibility is desirable to achieve the best outcome. The professional/residential owners are not at risk that this facility will not be provided.

1. The new plan is not a panacea for all ills and problems. It is not a means for remedying building defects and longstanding unresolved issues. Past building issues must be addressed by other means. Approval of the new plan does not adversely affect owners in relation to these matters.

1. The new plan is yet to be considered by Bayside, or referral authorities. The necessary applications and processes may take time, and will entail significant expense.
2. While in the ideal world it would be OC that has carriage of the new plan, OC is dysfunctional and does not have the capacity to take the new plan forward to registration. In the circumstances, it is appropriate for the Tribunal to authorise Knowles to take action on behalf of OC, prosecute the necessary applications and procure registration of the new plan. Knowles has the management and financial capacity and is willing to do so.
3. The orders to be made by the Tribunal will provide for Knowles to do so at its own expense. This will protect owners from the cost of obtaining registration of the new plan, and operate for their mutual benefit.

1. I am satisfied that it is just and equitable to make orders generally as set out above. The orders will place the affairs of the owners and the complex on a sound legal basis, and separate as much as possible the affairs of the commercial owners from those of the professional/residential owners.
2. It is to be hoped that under the new plan, the complex will be able to operate in a cooperative, efficient and lawful manner.

[1] Owners Corporations Act 2006 (Vic) ('OC Act'), s 92(3).

[4] Barintore Nominees Pty Ltd v Owners Corporation Plan No SP22934S [2019] VCAT 406 ('previous decision').

[5] Proceedings S ECI 2018 01159; S CI 2017 02301.

[6] Previous decision [10]-[12], [42]-[44], [53].

[7] Applicants' submissions dated 26 July 2019, [26].

[10] Conroy v Owners Corporation Strata Plan 30438 [2014] VCAT 550, [17]-[21] ('Conroy').

[12] O'Gorman v Owners Corporation RP 018831 [2017] VCAT 579, [28]-[29] (Rowland M); followed in Owners Corporation SP27589F v Roberts [2019] VCAT 723 (Buchanan M).

[13] Owners Corporation SP24525A v Paolucci [2018] VCAT 940 (Price SM).

[14] Ibid [15]. See also The Concept Developer Pty Ltd v Conroy [2015] VSC 464, [40]-[42], [47]-[53] (John Dixon J).

[18] J & G Knowles and Associates Pty Ltd v Owners Corporation RP12247 [2014] VCAT 98, [126] (Vassie SM), citing Victorian Civil and Administrative Tribunal Act 1998 (Vic) s 130.

[19] Acapulco Gold Pty Ltd v Wallis [2019] VSC 414, [33] (Richards J) (citations omitted).

[20] Button v Khung [2010] VCAT 252, [32] (Young SM).

[26] The non-consenting owners are the owners who voted against the adoption of the new plan, and those who did not vote at all.