1. The scheme of the Owners Corporations Act 2006 enables fees to be raised to maintain, insure and administer the common property on the basis of lot liability as established in the plan of sub-division. That is, a lot owner's liability for fees and charges is calculated in accordance with the lot owners' lot liability. As in the present case, lot liability is not always equal amongst lot owners. Larger lots often have greater lot liability and fees and charges are calculated accordingly.
2. Sections 28 and 49 of the Owners Corporation Act 2006, allow for an exception to the general rule that all fees and contributions must be raised on the basis of lot liability. Where works are wholly or substantially for the benefit of some only of the lots, fees and contributions may be recovered on the basis that the lot owners who benefit more pay more.
3. In order to engage Sections 28 and 49 of the Act, it must first be established that the works to restore the southern dome were undertaken wholly or substantially for the benefit lot 701.

1. It is relevant to set out some of the background to the dispute.
2. Up until about June 2012 there was no dispute about the owners corporation's responsibility or agreement to repair the domes. From at least 2009 the owners corporation approved and allowed for a substantial repair of the domes in the maintenance budget. As at early 2012 the owners corporation had anticipated the commencement of the restoration of the domes, approved contractors and had allowed $154,000 in the 2011/2012 maintenance budget for the works.
3. However, in June 2012 the committee of the owners corporation seems to have reconsidered its long standing commitment to pay for the restoration of the domes.
4. The first written evidence of this occurred on 14 June 2012 when Mr Brice Halls, committee member, emailed Mrs Leonie Boothey as follows:

At the 13 Jun 12 COM mtg, 2 out of 11 COM members voted YES to approve additional expenditure of $25,935 to render the domes waterproof. You were one of the COM members who voted YES even though Section 117 provides that you must not make improper use of your position as a COM member to gain an advantage for yourself.

Section 117 also provides that COM members must act honestly and in good faith and must exercise due care and diligence. The other 194 OC members may expect their COM members, who were elected to represent the best interests of all OC members and not just yours, to recover their money if is expended substantially for your benefit.

Many OC members are not aware, even today, that the domes are leaking - they certainly did not know the domes were leaking when they purchased their apartments. They will have great difficulty understanding why, although you knew the domes were leaking above your master bedroom in 1999, which was well before the statute of limitations expired, you were not sufficiently proactive in mitigating your losses. Many OC members, may, quite reasonably in my view, see your inaction as negligence, and question, perhaps even in a court of law, why they should suffer a financial loss as a consequence.

Section 49 provides that our OC may recover as a debt its costs of repairs to common property undertaken substantially for your benefit. That debt would accrue interest at approximately 10% and the accumulated balance would remain as a debt with lot 701, and if not recovered beforehand, would be recoverable at settlement of sale of lot 701.

1. The email unjustly accuses Mrs Boothey of a failure to comply with section 117 of the Act. Mr Horman, appointed to advise the Committee on the restoration had recommended additional waterproofing of the domes. I fail to see how Mrs Boothey could be in breach of her duty to act in good faith and with diligence by voting in support of a recommendation to waterproof the domes by the architect. It was also suggested that by voting in support of the waterproofing Mrs Boothey was seeking an improper advantage for herself. As the domes are common property, the allegation is without foundation.
2. A few days later, on 18 June 2012, Mr Jesus Argeso, a committee member of the owners corporation filed an application with VCAT against the owners corporation. Mr Argeso, sought an order that the owners of lot 701 pay for the repairs to the copper dome above their unit, on the basis that "in 1999...they (the Bootheys) knew the dome above their master bedroom was not watertight before they moved into their apartment - it has, apparently, leaked ever since. I believe the present owners of lot 701, who are the original purchasers, should pay for the cost of repairs to make the dome watertight because they did not take appropriate action to make sure the developer made the building watertight during the warranty period".

Motion seeking resolution that Bootheys pay entire cost of restoration works

1. On 18 July 2012, Mr Brice Halls, partly in response to Mr Argeso's VCAT proceeding, caused a ballot to be emailed to committee members seeking a resolution of the committee that the owners of lots 701 and 702 pay the entire cost of restoration of the domes. The ballot was as follows:

Whereas the entire structure of each of the two domes is situated wholly within the boundaries of each of lot 701 and 702;

Whereas the sole purpose of each dome is to provide shelter for the master bedroom of each of lot 701 and 702; and

Whereas the Grand Central Apartments Occupancy Permit was issued in 1997; and

Whereas the owners of each of lot 701 and lot 702 knew that their dome were not watertight in 1999, and

Whereas the implied warranty to ensure renovations are suitable for occupation expired in 2007, and

Whereas the owners of each of lot 701 and lot 702 did not exercise due care and diligence in the interests of the OC by taking action in 1999 to ensure that the renovations were not suitable for occupation, and

Whereas the Owners Corporations Act 2006 Section 49 provides that the OC may recover as a debt the cost of repairs, maintenance or other works undertaken wholly or substantially for the benefit of some only of the lots from the lot owners,

BE IT RESOLVED that the OC instruct SSKB to charge the progressive cost of works to make the domes watertight to each of lot 701 and 702 in equal proportions.

1. The resolution was passed with 8 votes in favour of the resolution.

1. Before the committee could determine that the Bootheys must pay the whole of the cost of the restoration of the southern dome, the committee was first required to make a determination that the works were undertaken wholly or substantially for the benefit of the Bootheys. Having made that determination, the committee was then required to make an apportionment of the cost, if any.
2. The evidence of the committee reasoning process in determining whether the restoration works were undertaken wholly or substantially for the Bootheys is partially contained in the 18 July 2012 ballot.
3. The ballot contains a number of material inaccuracies and establishes a flawed reasoning process.
4. Starting with the first point in the ballot, the domes are not within the lot boundaries of 701 and 702 as stated. The domes are common property. The domes are immediately above the upper boundary of lots 701 and 702. This is a serious misstatement of the facts. The fact that the domes are common property is not stated in the ballot.
5. The owners corporation contended that the restoration works were only carried out to stop the leaks into lots 701 and 702. It was contended that as only the Bootheys benefited from the restoration works of the southern dome they should pay for them. The second statement in the motion is an extension of this argument. It states that the sole purpose of each dome is to provide shelter for the bedrooms of 701 and 702. I find that this is not a correct statement. The domes are part of the roof system for the whole of the building and as such, protect the whole of the building not just the lots immediately below them. That is a matter of common sense and practicality.
6. In stating that the domes only serve to provide shelter to lots 701 and 702 the ballot failed to recognize that the domes are part of the whole building which is listed with Heritage Victoria as a heritage place. All lots are encumbered by a covenant with the Heritage Council to conserve the building. The domes form an integral and important part of the façade of the building which the lot owners are required to conserve and protect in accordance with the heritage listing. The ballot failed to consider that restoration of the domes is an obligation of all lot owners under the Heritage Act 1995. The restoration benefited all lot owners.
7. In the next 4 points, the ballot has concentrated on the alleged failure of the lot owners to pursue a claim for the leaking domes at an earlier time. This point of alleged negligence by the Bootheys is totally irrelevant to the enquiry required of the committee under Sections 28 and 49. The section required an analysis of whether the works were to be undertaken wholly or substantially for the benefit of the Bootheys.
8. Whether any claim may have been successfully brought against any other party for the leaking domes is highly speculative. Complete restoration was required because the copper cladding had fatigued and come to the end of its serviceable life. How anyone else could be liable for the restoration of domes has not been articulated. To state the alleged failure of the Bootheys to act, as a fact, is highly prejudicial to the Bootheys. No legal advice has been produced suggesting a possible action could have been taken by the Bootheys. The ballot asserts that there was an implied warranty, but the warranty has not been articulated.
9. The builder has denied it was within its scope of works to carry out works to the domes, so a claim against the builder would not have been straightforward. Any claim against the developer for the 90 year old domes has not been articulated, but in any event, must be brought by the owners corporation, not the lot owners. The lot owners made complaints to the owners corporation in 1999; it was then for the owners corporation to take the appropriate action, if it chose to do so.
10. The reference to the alleged warranty in the ballot is highly prejudicial to Bootheys. The allegations made against the Bootheys are without any proper foundation and in event, irrelevant to the task at hand, which was to consider whether the works were undertaken wholly or substantially for the Bootheys.
11. Paragraph 4 of the ballot refers to 'their domes' which reinforces the earlier misrepresentation that the domes belong to the lot owners of 701 and 702.

1. In arriving at its conclusion that the restoration of the southern dome was wholly or substantially for the benefit of the Bootheys, I find that the committee relied upon incorrect and misleading statements, failed to take into account relevant considerations and took into account irrelevant and prejudicial matters. For these reasons, I set aside the committee's resolution by ballot dated 18 July 2012. In its place I find the restoration of the domes was not undertaken wholly or substantially for the benefit of lots 701 and 702. As the domes are part of the roof system and a major feature of the historic façade of the building I find that the works were for the benefit of all lot owners. The cost of the restoration of the domes is to be borne by all lot owners in accordance with lot liability. The claim against the Bootheys to recover the whole cost of restoration of the domes is dismissed.
2. Finally, I note that it would have been prudent, diligent and fair for the owners corporation to seek independent legal advice prior to embarking upon the course of seeking a contribution of $104,750.89 from the Bootheys and then suing them for it.