1. The first hearing in this proceeding was held on 17 October 2024. The applicant's representative sought an adjournment on that day given that the applicant intended to call a number of witnesses to give evidence. After hearing the parties, I made orders adjourning the proceeding. The substantive hearing was held on 11 November 2024. At the conclusion of the hearing, I gave the parties the opportunity to file and serve submissions in writing.
2. I directed that the applicant file and serve closing submissions by 24 November 2024 and the respondent file and serve closing submissions by 9 December 2024. The parties filed minutes of consent orders on 18 December 2024, following which I extended time for compliance for the applicant to file and serve submissions to 18 December 2024 and time for the respondent to file and serve submissions to 31 January 2025.
3. I reserved my decision for the filing of submissions. The parties filed their submissions in accordance with the most recent orders. I have read and considered the submissions and now provide my reasons for decision.

1. In accordance with the obligation imposed on the applicant to obtain public liability and building replacement and reinstatement insurance, the Premises were insured by QBE Insurance (Australia) Ltd ('QBE') with a commercial strata package for $48,918 between 31 May 2022 and 31 May 2023. The policy included both $28,466,812 reinstatement and replacement cover and $30 million public liability cover. The policy was placed through CHU Underwriting Agencies Pty Ltd ('CHU') but issued in the name of QBE Insurance (Australia) Pty Ltd.
2. An Annual General Meeting of the applicant was held on 13 October 2022, at which James Thomas, Kerry Zarb, Joe Cimino, Andrea Cone and Dimitris Tsilikis were elected to the Committee of the Owners Corporation. An annual budget for the period 1 July 2022 to 30 June 2023 of $553,100 was approved, which allowed for $49,000 plus GST to be spent on insurance premiums. A note to resolution 10.1 stated that "Members resolved that the remaining quarterly instalments be adjusted to fulfil the budget approved budget" and resolutions were passed providing for the manager to take steps for the recovery of outstanding fees, levies and charges, and allowing the applicant to recover as a debt the costs, charges and expenses incurred by the applicant arising as a result of a person in default or breach: resolutions 11.1 and 11.2. Resolutions were also made in relation to insurance:

8. Insurance

The Owners Corporation currently has the following insurance cover: -

Company: CHU Pty Ltd

Policy No: CS0006083002

Kind of Policy: Commercial Strata Insurance

Building value insured: $28,466,812

Public Liability: $30,000,000

Fidelity Guarantee: $100,000

Expiry Date: 31st May 2023

8.1 Insurance renewal

It was unanimously resolved to continue the insurance at the next renewal 31st May 2023 with CHU subject to a competitive quotation being offered at a value according to the independent insurance valuation.

8.2 Payment of excess in the event of a claim

It was resolved that the excess will not be paid by the Owners Corporation for an individual claim. The excess will be paid by the individual Lot Owner responsible for an event (if applicable) or the person making the claim. The current standard excess is $1,000.

8.3 Independent Insurance Valuation (Section 65 of the OC Act 2006)

The Owners Corporation is required by law to seek an independent insurance valuation every 5 years. The last valuation was conducted in 2019 and members resolved to schedule the next valuation before the next insurance renewal May 2023.

8.4 Items not covered

Public Liability on private property & contents

Please note, the Public Liability on this policy is for the Common Areas only and Lot Owners should obtain Public Liability coverage as well as Landlord or Contents insurance on their own titles privately as these are not covered under the Owners Corporation's policy.

Carpets & floating floors

This is particularly relevant to the carpets which are not covered under the Owners Corporation policy. Owners should check their individual policy regarding floating floors as they may not be covered under the Strata Building Policy.

8.5 Disclosure

The Owners Corporation Manager noted that Excel Strata Managers are Authorised Representatives of Consolidated Insurance Agencies (CIA) ASIC Licensee No. 407094 for the sale of strata insurance products and receives commission from them.

8.6 General & factual advice

The Owners Corporation Manager can only give general and factual advice and is required to obtain clear instructions for the renewal of the insurance. It was resolved that quotations for renewal will be presented to the OC Committee for instruction.

8.7 Product Disclosure Statement & Financial Services Guide

A Product Disclosure Statement for CHU and Financial Services Guide for Consolidated Insurance Agencies (CIA) are available upon request at any point.

1. On 13 April 2023, CHU wrote to the Broker, with a renewal invitation for the policy period 31 May 2023 to 31 May 2024 based on the previous year's information. CHU offered to renew the existing insurance cover for $55,490.51, being:
   1. for building reinstatement and replacement cover of $29,890.153; and
   2. for public liability cover of $30,000,000.
2. Subsequently, a valuation for reinstatement and replacement insurance purposes was obtained on 10 May 2023 resulting in an increase in cover to $36,640,000 ('Valuation'). On or around 30 May 2023, the Valuation was provided to the applicant's insurance broker, Consolidated Insurance Agencies Pty Ltd ('Broker').
3. A commercial tenant list, which disclosed that Lot 23 was being used by the respondent's tenant at that time as a tattoo parlour, was also forwarded to CHU around 29 May 2023, in response to which CHU withdrew its previous offer of insurance renewal on 30 May 2023 and provided the applicant with an extension of insurance cover for 14 days to 14 June 2023 at a total cost of $5,206, with the replacement and reinstatement value of $36,640,000.
4. On 21 June 2023, the Broker placed public liability insurance (inclusive of other standard policies for the Owners Corporation) that would operate from 21 June 2023 to 14 June 2024 at a cost of $11,843.
5. The Broker sourced an industrial special risk insurance policy for the applicant from Eclipse Insurance Pty Ltd, in respect of building replacement and reinstatement cover as well as consequential loss for the period 14 June 2023 to 14 June 2024 at a cost of $157, 249 ('Eclipse Policy'). In its closing submissions, the applicant observed:

1. the Eclipse Policy was not directly comparable with the policy provided by CHU; 2. the Eclipse Policy only provided for two sections of cover: 1. Material loss or damage to the building to a value of $36,794,000; 2. Substantially expanded consequential loss to a value of $9,206,000; and

1. the total value provided by both sections of cover was $46,000,000.17.
2. The applicant paid for the Eclipse Policy on 20 July 2023 and it was backdated to operate from 14 June 2023.

1. Kerry Zarb, the Chairperson of the Owners Corporation, wrote to the members of the Owners Corporation Committee on 15 June 2023 to advise that insurance for the forthcoming year, initially expected to be in the range of $49,000, was due the following day and was instead priced at $157,000:

Dear Committee Members,

First, let me apologise for the late timed email this evening.

I'd like to keep you all updated with a development regarding the building and the insurance policy.

The policy expired today at 4pm and for the past week there have been communications with the insurance company regarding suite 23, I have purposely not included you in the threads on threads of communications intentionally as it is ridiculously long.

You may or may not know that a "Tattoo Parlour" has moved into the building and it has been discovered that our Insurance policy has changed significantly.

Here is an extract from Sylvia of the latest communication:

1. The email sent by Ms Zarb then reproduced an email from Sylvia Tsigonakis of Excel Strata Managers addressed to Ms Zarb which read as follows:

Ні Kerry,

I would recommend to get all the Committee involved

Point out the fact that the owner and property manager haven't been co-operative and the OC policy has expired

Based on the verbal legal advice, the OC could on charge the lot owner, not the tenant. The amount is to be confirmed by CIA

I have just forwarded your question as well, in the case that the occupant moves out, would the OC get a refund for the additional premium

I'll follow it up tomorrow and keep you posted

(emphasis added)

1. This advice was relied upon by Ms Zarb, who concluded her email to the other members of the Committee by observing:

In short, our policy was expected to be in the range of 49k to renew and the renewal received is 157k. See attached policy renewal.

Sylvia has been promptly acting on this situation and is continuing to work on this until resolved. What this means, as our policy needs renewal, it will be paid tomorrow so we continue to be covered as this is not negotiable as an Owners Corporation property and in everyone's best interest to have cover.

None of us can reject this policy being paid due to the legalities surrounding.

I want you to know of this situation and that it has elements of being simple, yet complex at the same time.

We have also been rejected completely from a number of other insurance companies for coverage, so in all honesty, this policy right now is our only option.

You may have many questions understandably from this email and I welcome all replies if you would like more information and we will continue to update you as more information comes forward also.

1. Shortly before the close of business on Friday 16 June 2023 Ms Zarb sent a further email to the members of the Committee, indicating that the insurance had not yet been placed and providing further advice regarding potential claw back of monies from Lot 23, including a potential legal basis for such recovery thus:

Hi All,

Just to keep you in the loop of what is happening.

The policy has not yet been paid until we have all the facts on this matter as there is not a simple refund on the policy available.

We are awaiting further updates from questions raised to the Insurance company.

Exactly how much the policy would be without a high risk occupant.

Verbally they have estimated 55k of the 157k policy.

The OC section 23.3A of the ACT - see extract below for the oncharging of this difference which is being carefully reviewed.

This will continue into next week, please stand by.

1. To this email, Ms Zarb attached an extract from section 23A of the Owners Corporation Act 2006 which highlighted the text 'an owners corporation may have fees to cover the cost of the premium for reinstatement':

23A Owners corporation may levy fees in relation to insurance > > (1) In addition to the annual fees levied under section 23, an owners corporation may levy fees to cover the costs of the premium for
> reinstatement and replacement insurance taken out in accordance with Division 6 of Part 3. > > (2) The fees levied under subsection (1) must be based on lot entitlement. > > (3) An owners corporation may levy a lot owner a fee to cover the cost of any of the following -

(a) an excess amount or an increased premium resulting from or attributable to an insurance claim, if the claim is caused by a culpable or wilful act or the gross negligence of -

(i) a lot owner; or

(ii) a lot owner's lessee; or

(iii) a guest of a lot owner or a guest of a lot owner's lessee;

(b) damage to the common property that is caused by a lot owner or a lot owner's lessee where either -

(i) the damage is not covered by insurance;

or

1. The following Monday 19 June 2023, Ms Zarb sent a further email to each member of the Committee (19 June email). It is on this email that the applicant relies to assert a notice of a ballot was given to the Committee in accordance with section 111 of the Act. The email read as follows:

Hi All,

We need to approve the policy for Excel to on-charge to the lot owner for the additional premium we will incur for the insurance policy.

The on-charge is estimated to be around $100,000 to the lot owner.

More details are still being investigated at this stage, however this is the first stage of the process on our side to commence.

If you can reply to this email with your individual approval please at your earliest convenience. Feel free for this to be a private reply or include the group, the choice is yours.

1. A variety of responses was received from the Committee members.
2. First in time, Mr Cimino replied later that day stating:

You have my approval to on charge the lot owner for the additional cost of our insurance premium. $100,000 is a lot of money.

1. Before agreeing to Ms Zarb's proposal, Ms Cone-Farran wrote to her on 20 June 2023 requesting further information in relation to the following four matters:
   1. Whether or not the tattoo business complied with the City of Port Philip town planning regulations for the type of business;
   2. If no planning permit had been sought and obtained, its impact vis-à-vis Council regulations;
   3. Whether or not the owners corporation could exclude building insurance cover from the respondent's lot because of the nature of the tenant's use; and
   4. Whether or not the lot owner could be legally compelled to obtain his own separate building insurance and common area cover.
2. Ms Zarb responded to this email on 21 June 2023 first advising that while a lot owner/occupier may need council permission, that was a separate matter, and, second, attaching advice from Ms Tsigonakis to the effect that an owners corporation policy could not exclude a lot from a building policy. She then clarified for that Committee Member's benefit only the matter in respect of which she sought agreement:

Kindly reply urgently if you agree to on-charge the additional expenses as without the Committee's full approval, we cannot proceed to action this matter to the lot owner.

1. Ms Cone-Farran's response evinces agreement about a different matter to that which the applicant claims agreement was obtained, namely payment of the Building Insurance Policy. It is less clear whether or not she agreed to levying a particular levy. In her response dated 21 June 2023, she wrote:

I consent to the payment of the Building insurance policy. However, I do not agree to a much higher premium levied on all unit holders because of the occupancy of a high risk business- a tattoo studio - in the building. The additional high risk premium should be payable by the tattoo business to the Body Corporate Excel and not spread/distributed across to other unit holders.

1. She then sought advice from Ms Zarb regarding the agreement of other unit holders to the insurance premiums and, somewhat presciently, the likely outcome if the respondent refused to pay the additional insurance premium of $100,000. While acknowledging permits might be a separate matter, she emphasised that counsel permission is required to operate a tattoo studio and that public health concerns and potential legal exposure warranted further investigation with the City of Port Phillip.
2. On 21 June 2023, a further email was received in response to Ms Zarb's 19 June email which stated somewhat cryptically:

On behalf of Dr John - as his representative, I believe we should on-charge the costs to the lot-owner as their responsibility.

1. The email came from James Thomas, General Manager AORTA's email account but did not identify the person who sent the email.
2. Mr Tsilikis Dimitrios was the last of the Committee members to respond to Ms Zarb's 19 June email. His response is probably the least helpful to the applicant's case. He wrote:

The Greek Ministry of Foreign Affairs in Athens will never approve a special levy for this insurance policy.

Therefore, the extra cost should be passed to the lot owner.

1. It is unclear precisely to what Dimitrios was referring when he spoke about a "special levy", be it a special fee or charge designed to cover extra extraordinary items of expenditure as contemplated in section 24 of the Act, a levy to cover the costs of the premium for reinstatement and replacement insurance taken out in accordance with Division 6 of Part 3 of the Act, an additional annual fee levied on a lot owner under section 23(3A) of the Act, or another kind of fee relating to a matter required to be passed by special resolution.
2. While no documentary evidence of Ms Zarb's 'vote' on this matter is before the Tribunal, it is apparent from her conduct and her email to Ms Tsigonakis dated 22 June 2023 that she agreed with her own proposal.
3. The closing submissions filed on behalf of the applicant submit that each of the Committee members approved the Eclipse Policy and the on charging $100,000 for the increase insurance premium to the owner of Lot 23 by return email.
4. The evidence of Ms Zarb at hearing was that she sent the following email as an afterthought to Ms Tsigonakis on 29 June 2023 to formally notify her of the Committee's resolution:

Hi Sylvia,

Given our insurance premium has significantly increased on the policy of last year, the Committee members have unanimously agreed that the lot owner should be responsible for the increase incurred.

As kindly outlined from you in other communications, the policy will be in the range of $170,000 whereas we expected a maximum of $55,000.

As per the OC AGM minutes held on Thursday 13th October 2022, and noted, 2021/2022 was a premium of $44,849.46 and the 2022/2023 budgeted amount was $49,000 to allow for CPI increases expected.

The Committee also agreed that a premium of up to $55,000 would be acceptable given the current financial climate.

Therefore the conclusion of charging the amount of $100,000 to the lot owner was mutually agreed to be fair and reasonable.

Also to confirm the Committee understands that the premium incurred for the building coverage has increased for the pure reason of Lot 23 being occupied by a Tattoo Parlour and the insurance companies view this as a high risk industry.

The Committee also has knowledge in its decision making process from you that we were rejected of insurance cover from a number of other companies for this occupants industry.

The Committee also stands firm to the fact that we, the Committee, nor Excel Strata, has any prejudice for the occupant or their industry, we are all purely guided by the Insurance companies and/or their representatives on this matter.

We appreciate your support and are grateful for you seeking further legal advice for this unforeseen situation.

1. Two fee notices were sent to the respondent. The first "Special Fee Notice" is dated 6 July 2023 and purports to be given by the applicant pursuant to section 24 of the Act requiring payment of $100,000 being said to be for the "On-charging OC Insurance Policy Premium Increase Lot 23-as resolved by OC Committee." The applicant does not rely on this fee notice.
2. On or about 20 July 2023, the applicant sent to the respondent's nominated email address, a second "Special Fee Notice" requiring payment of $100,000 for an increased insurance premium said to be caused by Lot 23 being used as a tattoo parlour. The notice provided for the respondent to pay the fee within at least 28 days of the date of the notice. This notice reports to have been given instead pursuant to section 23(3a) of the Act.
3. The applicant's closing submissions assert that the second notice was issued under section 23 and 31 of the Act on the basis of a decision of the Committee pursuant to section 23(3A) of the Act.[1] While conceding that the fee notice did not state that the lot owner had an obligation to pay the fees and charges within 28 days after the date of the notice or state that interest at the rate specified in the notice was to be payable in respect of any overdue fees and charges, and so doing acknowledge the impossibility for it to claim penalty interest on the unpaid fees, it nonetheless contends that the fee notice remains valid by operation of section 53 of the Interpretation of Legislation Act 1984 as it was substantially compliant with the approved form.

1. On about 11 September 2023, the respondent informed the applicant that Lot 23 had ceased trading as a tattoo parlour, which was immediately notified to the Broker and the policy was cancelled. A credit note was the issued in the sum of $76,341.65 on 12 September 2023.
2. The applicant obtained a new insurance policy on 18 September 2023 for replacement and reinstatement insurance cover and consequential loss cover for $58,988 for the period 13 September 2023 to 13 September 2024.
3. Having regard to the credit note, the applicant submits that it spent the equivalent of $80,907.35 for the Eclipse Policy for just under three months' cover.
4. There is no mention in the minutes to the Annual General Meeting of the applicant held on 9 July 2024 of any additional fees having been struck in relation to the on-charging to the respondent. Resolution 10.1 at that meeting provided only that "[i]n accordance with Section 23 of the OC Act 2006 it was unanimously resolved that the current budget and contributions for the year ending 30/06/2025 be adopted" and that the insurance coverage with Eclipse and with CHU for public liability be continued:

8. Insurance

The Owners Corporation currently has the following insurance cover: -

Company: Eclipse Business Insurance

Policy No: ISR232306B

Kind of Policy: Commercial Strata Insurance

Building value insured: $36,640,000 (plus other sub-limits)

Public Liability: $20,000,000 (separate policy with CHU)

Expiry Date: 13 September 2024

8.1 Independent Insurance Valuation (Section 65 of the OC Act 2006)

The Owners Corporation is required by law to seek an independent insurance valuation every 5 years. The last valuation was conducted on 10 May 2023 with the next valuation due in May 2028 or earlier, as resolved by the Owners Corporation.

8.2 Insurance Renewal

It was unanimously resolved to continue the insurance at the next renewal 13/09/2024 with the most competitive provider, either on a Strata or ISR Policy, being offered at a $37,735,898, as per the building valuation recommendation.

8.3 Payment of excess in the event of a claim

It was resolved that if an individual makes a claim where they are the only beneficiary or in the event that a particular lot owner has caused the need for a claim, the individual concerned will pay the excess. In all other scenarios the excess will be paid by the Owners Corporation. The current excess is $5,000.00for standard claims.

8.4 Items not covered

Public Liability on private property & contents

Please note, the Public Liability on this policy is for the Common Areas only and lot owners should obtain Public Liability coverage as well as Landlord or Contents insurance on their own titles privately as these are not covered under the Owners Corporation's policy.

Carpets & floating floors

This is particularly relevant to the carpets which are not covered under the Owners Corporation policy. Owners should check their individual policy regarding floating floors as they may not be covered under the Strata Building Policy.

8.5 Disclosure

The Owners Corporation Manager noted that Excel Strata Managers are Authorised Representatives of Consolidated Insurance Agencies (CIA) ASIC Licensee No. 407094 for the sale of strata insurance products and receives commission from them.

8.6 General & factual advice

The Owners Corporation Manager can only give general and factual advice and is required to obtain clear instructions for the renewal of the insurance.

8.7 Product Disclosure Statement & Financial Services Guide

A Product Disclosure Statement for Eclipse Business Insurance and Financial Services Guide for Consolidated Insurance Agencies (CIA) are available upon request at any point.

1. At paragraph 14 of its closing submissions, the applicant asserts it spent $100,000 more on building replacement and reinstatement insurance as well as public liability insurance than it otherwise would have spent on such were it not for Lot 23 being used as a tattoo parlour. The submissions go on at paragraph 22 to detail the calculation of that amount being the total of the Eclipse Policy of $157,249 less the revised policy of $58,988, totalling $98,261.

1. On 7 March 2024, a final notice was sent to the respondent requiring payment of $50,000. The applicant's closing submissions explains the calculation of this reduced fee at paragraph 23 thus:

With the issuance of the refund from cancellation of the New Policy, the Owners Corporation reduced the amount on-charged to Lot 23 for the increased annual insurance costs from $100,000 to only claim $50,000. The Owners Corporation did not pass another resolution relying upon Section 23(3A) of the Act but instead just reduced its claim for additional annual insurance costs incurred arising from Lot 23's use as a tattoo parlour.

1. The applicant contends that it incurred additional insurance costs to 13 September 2023 of $78,003.35, comprising:
   1. $66,160.35 for building replacement and reinstatement insurance; and
   2. $11,843 for public liability insurance.
2. The applicant submits that it was entitled to seek payment of that amount, which it characterises as an additional fee for an additional annual insurance expense, by the respondent under section 23(3A) of the Act. In this respect, the applicant submits that it was entitled under section 23(3A) to strike an additional annual fee for additional annual insurance expenses because:
   1. it incurred annual insurance costs that were substantially in excess of what it would normally occur as a result of the respondent's tenant's use of the premises as a tattoo parlour;
   2. the respondent's lot liability of 139 units out of a total of 10,141 units does not adequately take account of the additional annual insurance costs caused by the use of Lot 23; and
   3. no other lot owner received a benefit from the use of Lot 23 as a tattoo parlour and in any event section 23 (3A) and (3B) do not import application of the "benefits principal" as contemplated elsewhere in the Act, but rather introduce a different principle to be applied from the perspective of "which lots use has caused the works as opposed to who benefits from the works/expenses".
3. The applicant submits that each member of the Committee approved by an exchange of emails between 19 and 21 June 2023 the striking of an additional annual insurance fee of $100,000 payable by the respondent. The decision was characterised by the applicant as "an urgent ballot" and that the following requirements for a valid resolution by way of ballot were met:
   1. notice by way of email seeking each Committee member's vote was issued by the chairperson, being a member permitted to do so under section 111(2) of the Act;
   2. the email ballot was responded to by all members of the Committee with none suggesting that further time was required to consider the issue; and
   3. the email ballot was conducted in urgent circumstances lest the applicant breach sections 59 and 61 of the Act.
4. The applicant concedes that the ballot did not comply with all technical requirements for the conduct of a ballot of the Committee, however, insofar as it was not conducted pursuant to the issuance of a notice is required by section 111(3) of the Act. However, the applicant submits that the decision of the Committee to approve the charging of the additional annual fee to the respondent was valid and ought not be set aside for any technical non-compliance with the process required to make decisions by the Committee. In support of these contentions, the applicant submits:
   1. section 111 does not set any consequence for breach of the requirements of that provision;
   2. the respondent did not suffer any prejudice as a result of the Chairperson's email to conduct the email ballot by not stating that a formal ballot of the Committee under the Act was being conducted or that the ballot would not be open for 14 days and only for a short period, as the respondent was not entitled to vote in the email ballot;
   3. the members of the Committee understood the intent and purpose of the decision being made by them and the effect should not be made;
   4. the object and purpose of the notice provision was met with all members of the Committee responding to the email ballot;
   5. there is no purpose to be served in ordering a new vote; and
   6. there is no evidence of any lot owner having suffered any kind of prejudice by the shorter notice period whereas the reverse may have been true.
5. In support of the applicant's claim that non-compliance with the technical requirements outlined in section 111 of the Act should not result in automatic invalidity of any resolution made or purportedly made pursuant to a ballot relying on section 111, the applicant referred at length to the VCAT case Jenkins v OCVM Commercial (Owners Corporations) [2019] VCAT 1078. While that case was primarily concerned with Part 4 of the Act, and not Part 5 which contains section 111, the applicant submits that given Part 5 does not provide for any consequence of a breach of section 111, there is no automatic consequence for failing to comply with notice periods.

1. The respondent contends that the applicant has not presented any evidence of a valid resolution having been passed, by way of a meeting or ballot, for the striking of a levy or the adjustment of that levy from $100,000 to $50,000. As a result, the levies are not recoverable.
2. In this regard, the respondent submits that the email circular relied upon by the applicant was not a ballot for the purposes of section 111 of the Act as the chair or secretary did not give notice in writing of the ballot containing the resolution to be voted on by members of the Committee, or the closing date of the ballot. Further, the respondent submits that there was evidence that the Committee was confused and not sure what section of the Act they were relying on to strike the levy against the respondent.
3. The respondent further submits that the purported resolution predates the acquisition of the insurance policy. This submission is based on the omission in the email setting out the final policy premium. The applicant submits that an applicant is only permitted to pass a resolution striking of the under section 23(3A) once the cost is incurred. This was not the case as the policy had yet to be obtained and paid for by the applicant.
4. Finally, the respondent submits that the applicant has not adduced evidence of a resolution being passed to amend the levy from $100,000-$50,000, nor how the figure of $50,000 was attributable to the respondent's lot.

1. The dispute between the parties primarily relates to whether or not the applicant was successful in on-charging the increase in insurance premium costs arising from the use of the respondent's lot by a tattoo parlour to the respondent.
2. It is not in dispute that the applicant was required to take out both reinstatement and replacement insurance for all buildings on the common property and public liability insurance for the common property in accordance with sections 59 and 60 of the Act.[2] In addition to these obligations, section 62 of the Act provides that an owners corporation may resolve to insure any additional insurable interest in the land affected by the owners corporation and relating to the performance of its functions by ordinary resolution. It is also not in dispute that the applicant had taken out public liability and building replacement and reinstatement insurance with CHU/QBE for $48,918 between 31 May 2022 and 31 May 2023 in order to satisfy those obligations.
3. Members of the owners corporation unanimously resolved at an annual general meeting conducted on 13 October 2022 to continue this insurance upon its next renewal date, being 31 May 2023. This resolution was subject to a competitive quotation being offered and an independent insurance valuation being conducted. The annual budget approved at the meeting allowed for $49,000 plus GST for the purchase of that insurance.
4. At the same meeting a resolution was passed in relation to the on-charging of any excess under individual insurance claim to the lot owner responsible for the claim. However, no resolution was passed purporting to on-charge any additional costs associated with an increased insurance premium owing to an individual lot owner's use of the lot.
5. While a quorum was not present at the meeting, there is no dispute that the interim resolutions of the meeting became resolutions of the applicant 29 days from the date of the meeting in accordance with section 78(4)(a) of the Act.
6. For reasons that are not immediately apparent, there was considerable delay in arranging a valuation for reinstatement and replacement insurance purposes and insurance renewal in accordance with the resolutions passed at the 2022 annual general meeting. However, it is clear that upon a commercial tenant list being provided to CHU two days before the existing insurance coverage expired, CHU withdrew its previous offer of insurance on 30 May 2023 and the applicant was placed in a position in which it could no longer continue with the same insurance policy in accordance with resolution 8.1 passed at the 2022 annual general meeting. While additional insurance was obtained for 14 days to 14 June 2023 at considerable expense, I nonetheless accept the applicant's submission that there was urgency in sourcing and obtaining insurance to ensure that the applicant was not in breach of its obligations under the Act.
7. On behalf of the applicant, the Committee then obtained through the Broker:
   1. building replacement and reinstatement cover together with consequential loss cover for the period 14 June 2023 to 14 June 2024 at a cost of $157, 249 from Eclipse Insurance Pty Ltd on 20 July 2023, for which a credit note was the issued in the sum of $76,341.65 on 12 September 2023; and
   2. public liability insurance 21 June 2023 to 14 June 2024 at a cost of $11,843 from Axis Underwriting Services Pty Ltd on 21 June 2023.
8. There is no argument that the Committee was prevented from obtaining these insurance products on behalf of the applicant. In this regard, pursuant to resolution 13.2 and section 11 of the Act, the Committee was delegated all powers and functions that may be exercised by the Owners Corporation, except for those requiring a special or unanimous resolution or those resolved to be determined at a General Meeting of the Owners Corporations under Section 82 of the Act. This is so despite the budget passed at the 13 October 2022 Annual General Meeting allowing only for $49,000 plus GST to be spent on insurance premiums, in circumstances where the amount ultimately spent by the applicant far exceeded this amount. The argument lies with respect to the mechanism by which the Committee sought to raise funds to pay for the higher premiums.

1. The applicant did not seek to borrow money in order to cover the difference between the higher premiums and those it had budgeted for pursuant to the power contained in section 25 of the Act.
2. Nor does the applicant rely on the fee notice dated 6 July 2023 purportedly issued under section 24 of the Act, to recover the additional costs it incurred. Section 24 contains a power for an Owners Corporation to levy special fees and charges designed to cover extraordinary items of expenditure but is restricted to the cost of repairs, maintenance or other works that are carried out wholly or substantially for the benefit of some or one, but not all, of the lots affected by the owners corporation.
3. Nor does the applicant rely on section 23A of the Act, which specifically deals with the levying of fees in relation to the costs of the premium for reinstatement and replacement insurance taken out in accordance with the requirements of the Act. This may be because any fees levied under section 23A must be based on lot entitlement and not on the benefit principle found elsewhere in the Act. It provides:

23A Owners corporation may levy fees in relation to insurance

(1) In addition to the annual fees levied under section 23, an owners corporation may levy fees to cover the costs of the premium for reinstatement and replacement insurance taken out in accordance with Division 6 of Part 3.

(2) The fees levied under subsection (1) must be based on lot entitlement.

(3) An owners corporation may levy a lot owner a fee to cover the cost of any of the following -

(a) an excess amount or an increased premium resulting from or attributable to an insurance claim, if the claim is caused by a culpable or wilful act or the gross negligence of -

(i) a lot owner; or

(ii) a lot owner's lessee; or

(iii) a guest of a lot owner or a guest of a lot owner's lessee;

(b) damage to the common property that is caused by a lot owner or a lot owner's lessee where either -

(i) the damage is not covered by insurance; or

(ii) the cost of the damage is less than the excess amount that would have been payable on an insurance claim in relation to the damage;

(c) an excess amount on an insurance claim if the claim solely relates to a lot owner's lot.

(4) The owners corporation may determine the times for payment of fees levied under subsection (1) or (3).

1. Rather, the applicant relies upon section 23(3A) to recover the additional costs it incurred in the procurement of the insurance policies outlined at paragraphs 59 to 60[3] from the lot owner.3 Section 23 contains the power for the applicant to levy annual fees, which includes both fees to cover insurance and "additional fees" in subsection 3A. It provides:

23 Owners corporation may levy annual fees

(1) An owners corporation may set annual fees to cover -

(a) general administration; and

(b) maintenance and repairs; and

(c) insurance; and

(d) other recurrent obligations of the owners corporation.

(2) If the owners corporation has an approved maintenance plan, the annual fees must include fees that are -

(a) designated for the purpose of the maintenance plan; and

(b) sufficient to allow the maintenance plan to be implemented.

(3) Subject to subsection (3A), the annual fees set must be based on lot liability.

(3A) The owners corporation may levy an additional annual fee on a lot owner if -

(a) the owners corporation has incurred additional costs arising from the particular use of the lot by the lot owner; and

(b) an annual fee set on the basis of the lot liability of the lot owner would not adequately take account of those additional costs.

(3B) Any additional annual fees under subsection (3A) must be levied on the basis that the lot owner of the lot that benefits more from the use of the lot pays more.

(4) The owners corporation may determine the times for payment of annual fees.

1. The applicant contends that the fee notice dated 20 July 2023 was issued on the basis of a decision of the Committee to levy an additional fee under section 23(3A) following a circular ballot pursuant to section 111 of the Act. The evidence of Ms Tsiginakis was that she issued the fee notices on the basis of a decision of the Committee. While she could not recall at hearing when a resolution had been passed supporting the levy, she recalled the text of the resolution having been sent to her from the Chairperson of the Committee.
2. Setting to one side the question of whether or not the Committee was authorised to levy this fee under section 23(3A) or another provision of the Act, it is first necessary to determine whether or not the Committee made such a resolution, purportedly or otherwise and, to the extent that such a resolution was made, the nature and content of that resolution.

1. The applicant submits that each member of the Committee approved the striking of an additional annual insurance fee of $100,000 on the owner of Lot 23 by exchange of emails between 19 and 21 June 2023. The applicant submits the process adopted to do so was by way of an "urgent ballot".[4] It is this urgent ballot that the applicant relies upon, as the decision to levy the fee was not later ratified by a subsequent resolution passed at a general meeting of the applicant.
2. The Act does not provide for decision making by way of "urgent ballot". It does, however, provide for a procedure for holding a ballot in section 111 of the Act, which states:

(1) A ballot held by a Committee must be held in accordance with this section.

(2) The chairperson or the secretary must give notice in writing of the ballot to each member of the Committee.

Note The Electronic Transactions (Victoria) Act 2000 enables the notice to be given electronically.

(3) The notice must state -

(a) the resolution to be voted on by the members of the Committee; and

(b) the closing date for the ballot, being -

(i) 14 days after the date of the notice; or

(ii) if the matter that is the subject of the ballot is urgent, less than 14 days after the date of the notice.

(4) A resolution for which a ballot is held is passed only if a majority of the members of the Committee state that they are in favour of the resolution before the closing date for the ballot.

1. In this case, no formal notice of an "urgent ballot" was sent by the Chairperson or secretary of the Committee, and there is no reference in any of the emails relied upon by the applicant to the striking of a levy or fee. Instead, the applicant relies upon an email of Ms Zarb dated 19 June 2023 in which she wrote:

Hi All,

We need to approve the policy for Excel to on-charge to the lot owner for the additional premium we will incur for the insurance policy.

The on-charge is estimated to be around $100,000 to the lot owner.

More details are still being investigated at this stage, however this is the first stage of the process on our side to commence.

If you can reply to this email with your individual approval please at your earliest convenience. Feel free for this to be a private reply or include the group, the choice is yours.

1. No separate policy regarding on-charging was attached to the email, nor filed with VCAT.
2. It is entirely permissible for a ballot to be conducted by circulating a resolution to committee members electronically whereby each committee member states their vote in the document before sending it to the next. The note to section 111(2) states that circulating resolutions is permissible when done in accordance with the Electronic Transactions (Victoria) Act 2000. However, the text of the email purportedly notifying the Committee members of the urgent ballot relied upon by the applicant makes no reference in its text to a ballot having been called, nor the date the ballot closed.
3. In this way, whereas the closing date for ballots is generally 14 days after the date of the notice,[5] in cases such as this if the matter that is the subject of the ballot is urgent, less than 14 days notice may be given. In any event, specification of the closing date of the ballot is mandated. Yet no date was stipulated for the closing of the ballot. While the 19 June 2023 email requested the Committee members to approve the ballot at their "earliest convenience", Committee members could not know with certainty if they failed to respond by a particular time, their vote would not be counted in the ballot. This was a clear non-compliance with section 111(3)(b) of the Act.
4. The respondent contends the resolution purportedly passed was invalid for non-compliance with section 111 of the Act. In closing submissions, the respondent contends:

The Applicant has not presented any evidence of a valid resolution being passed by way of a meeting or ballot for the striking of the levy or the adjustment of that levy from $100,000.00 to $50,000.00. The email circular did not contain the appropriate resolution and was not a ballot for the purposes of Section 111 of the OC Act. If the vote was pursuant to a circular resolution (and there is no evidence of this) there would need to have been a ballot held in accordance with Section 111 which requires the chair or secretary to give notice in writing of the ballot, the notice must state the resolution to be voted on by the members of the Committee and the closing date for the ballot.

1. The applicant concedes the decision of the Committee does not comply with the technical requirements for the conducting of a ballot of the Committee and that it was not conducted with the issuance of a notice as required by section 111(3) of the Act.[6] However, the applicant also contends, quite rightly in my view, that the Act does not provide for any particular consequence in circumstances where the requirements of the provision are breached. As a result, it is necessary to consider the proper construction of the section to determine the effect on a decision purportedly made in breach. In this regard, it is well established that an act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Rather, as the plurality of the High Court observed in Project Blue Sky Inc v Australian Broadcasting Authority:

Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition.[7]

1. While there is support for the proposition that it is not automatically the case that a lack of proper notice of a ballot will result in invalidity of the ballot,[8] the effect of non-compliance with section 111 will depend on careful consideration of the factual circumstances of the case. In this regard, the applicant relies upon Member Rowland's findings in Jenkins v OCVM Commercial (Owners Corporations) [2019] VCAT 1078 ('Jenkins') at [44] to [49]:

46. In my opinion, the Act does not provide a consequence for a breach of the provisions of Part 4 (apart from sections 87 and 89), because the Act recognises that a breach may be substantial or trifling. Each breach needs to be examined in its own context to determine what remedy, if any, is fair.

47. Instead of providing a consequence for a breach, the Act provides that an aggrieved person, entitled to do so, may make a complaint to the Owners Corporation under Part 10 of the Act and/or apply to the Tribunal for any of the remedies set out under section 165 of the Act.

48. The Tribunal may make any order it considers fair but must act within well established principles of law. Not every breach will justify a remedy. In deciding whether an order should be made the Tribunal may have regard to; the effect on the outcome of anything done in breach of the Act; whether any lot owner suffered prejudice; whether the decision has been ratified; the impact on third parties and any other relevant matter.

49. In conclusion, a meeting, resolution or decision made in breach of a provision of Part 4 of the Owners Corporations Act 2006 does not automatically render it void and of no effect. Instead, an aggrieved person, entitled to do so under section 163 of the Act, may apply to the Tribunal for a discretionary remedy. The Tribunal will need to carefully consider the circumstances of each case to determine if a remedy is appropriate and fair.

1. The VCAT case Mahon v Owners Corporation PS349276K (Owners Corporation) [2012] VCAT 1605, concerned a postal ballot in which notice was given of a proposed resolution specifying a closing date for voting. However, the owners corporation manager had mistakenly sent to the lot owners a subsequent letter declaring that a resolution had been passed. Realising his mistake, the manager sent another letter the following days advising of the error and asking the lot owners to ignore the previous letter. In considering the effect on the ballot of the mistaken letter and whether or not it invalidated the ballot, Member Vassie held:

Where the OC or its manager, acting in good faith, has committed an error in the conduct of the ballot, the resolution that has resulted from the ballot should be declared invalid if, but only if, the Tribunal is satisfied that by reason of the error the members have been prevented, or there is reasonable ground to believe that they may have been prevented, from voting to defeat the motion or to cast sufficient negative votes to mean that there was no special resolution.

1. Given that by 21 June 2023 each Committee member had expressed their position in relation to the 19 June 2023 email, I perceive no meaningful impact arising as a result of non-compliance with the notice period for the ballot specified in subsection 111(3)(b). This by itself is not enough in my opinion to invalidate the ballot.
2. However, I have greater difficulty with non-compliance with section 111(3)(a), which requires that the notice contain the text of the resolution to be voted on by the members of the Committee. To the extent that the applicant relies on the text of the email of 19 June 2023 to support a resolution to levy fees under section 23 the Act, I find the email does no such thing. Rather, the email sought the approval of a "policy for Excel to on-charge to the lot owner for the additional premium we will incur for the insurance policy". The email neither indicates that the approval sought is by way of vote on a ballot, nor that it is for the striking of a fee to be paid by the respondent under section 23(3A) of the Act.
3. The email makes clear that the additional cost incurred by the applicant in obtaining insurance had not been determined at the time that the email was sent. Rather, an estimate of $100,000 was specified as the "additional fee" with the note that more investigations were being conducted at the time the email was sent. The nature of these investigations was not clear from the text of the email, nor was the nature and scope of the policy referred to in the text of the resolution, if the policy was to apply only to the respondent and only on this occasion, the basis upon which the figure to on-charge was to be calculated and if it would include fees additional to the premium, or the mechanism by which the charge was to be levied.
4. In relation to this last matter relating to the mechanism by which the fee was to be levied, the surrounding documents provide some context. However, the context suggests that there was considerable uncertainty as to the basis upon which the fee was to be levied. In this regard, a preceding email to that of 19 June 2023 sent from the Chairperson to the other Committee members attached an extract from section 23A of the Owners Corporation Act 2006 which highlighted the text 'an owners corporation may have fees to cover the cost of the premium for reinstatement' while at the same time making reference to section "23.3A of the Act". Adding to this confusion is the fee notice dated 6 July 2023 which purports to have been issued in accordance with a resolution made under section 24 of the Act.
5. A substantial amount of time was devoted at hearing to identifying the resolution relied upon to strike the levy. What became clear was that there was considerable confusion as to the source and text of the resolution and agreement to it by the Committee members. In view of the wording of the 19 June 2023 email, it is hardly surprising that the members of the Committee responded in various, and at time confused, ways. In this regard, while clear that Ms Cone-Farron consented to the payment of the building insurance policy, her response indicates that she was of the opinion that the additional cost should be borne by the tattoo business. The representative of the Greek Ministry of Foreign Affairs in Athens appeared to respond to the informality of the email by giving his opinion in general terms. While agreeing that "the extra cost should be passed to the lot owner" specifically, he explicitly did not consent to a special levy for payment of the insurance policy. It is unclear the basis upon which James Thomas' vote was counted, by proxy or otherwise.
6. Indeed, the email of Ms Zarb communicating the Committee's resolution to Ms Tsigonakis on 29 June 2023 similarly does not include a statement as to the striking of a levy under section 23 and has difficulty expressing the resolution said to have been agreed by the members of the Committee. While stating that "the Committee members have unanimously agreed that the lot owner should be responsible for the increase incurred", she makes no reference to the striking of a particular fee. Rather, noting that the policy was anticipated to "be in the range of $170,000", she states that $49,000 was budgeted to allow for CPI increases, that the Committee expected a maximum of $55,000 to be spent for insurance costs that year, and ultimately records a conclusion regarding the Committee's deliberations as charging the amount of $100,000 to the respondent as "being mutually agreed to be fair and reasonable". This is not reflected in the Committee members' email communications, which indicate that the majority of the Committee members instead supported on-charging of the entire additional costs of the insurance, and not the specific figure of $100,000 which, should the cost of the insurance be $170,000 would result in an additional $21,000 payable by the owners corporation for insurance that year compared to the budgeted amount. Conversely, at paragraph 20 of the applicant's closing submissions, the applicant submits that it spent a total of $98,261 on the Eclipse Policy of $157,249 less the revised policy of $58,988, suggesting that the fees levied were in excess of those agreed to by the Committee.
7. In the end, after having regard to the credit notes issued to the applicant, it was the applicant's position that to 13 September 2023, it had incurred additional annual insurance costs of $78,003.35 for which it was entitled to seek payment of by the respondent pursuant to Section 23(3A) of the Act. Yet this is not the amount claimed, nor the amount reflected in the Fee Notice or Final Fee Notice relied upon by the applicant. While the applicant submits for the purposes of Section 23(3A) of Act there is no obligation or mandate for it to on-charge all additional annual costs caused by Lot 23's use as a tattoo parlour, such a position is clearly at odds with the text of the email of 19 June 2023 and the majority of the responses of the Committee members.
8. I consider there are good policy reasons for requiring members of an owners corporation committee to be given clear notice of the text of a resolution upon which those committee members are asked to express an opinion. Before any count it is undertaken, it is necessary that those who are eligible to vote have been given the opportunity know, even understand, the resolution so that they may thoughtfully state their support or opposition to it. The careful drafting of a resolution then is important to ensure that the resolution is clear and unambiguous, but also to assist the manager to understand what is required or permitted of her or him to carry out the will of the committee. If this has not been done, there may be a dispute as to whether or not the agreement amounted to a resolution at all.
9. Further, to clearly identify the text of a resolution assists the recipients of the resolution to understand that the request to express agreement is to vote in a ballot. The Act does not define the term "ballot". However, the procedural requirements set out in section 111(3) and its context indicate a ballot in the sense contemplated by section 111 refers to a formal process conducted by a committee of an owners corporation to decide on resolutions. Were it not so, there would be no requirement that notice be given in writing of the ballot.
10. While I do not consider it necessary that a matter upon which a vote is sought be specifically referred to as a "ballot" in order to be such, I do consider it necessary that those who are called upon to express their support or opposition to a proposition are at least aware that should a majority of the members of the committee state they are in favour of the resolution the subject of the ballot, it will result in a formal resolution being passed. This may be achieved, for example, by labelling the ballot as such, stating in the text of the notice that a ballot has been called, or even gleaned from the procedural steps for the conduct of the ballot, whether explained in the notice itself or not.
11. There is nothing in the text of the 19 June 2023 email to indicate that a ballot had been called, or that the request to express approval was a resolution regarding the striking of a fee under section 23(3A) of the Act. Further, when viewed in light of the non-compliance with the timing requirements in subsection 111(3)(b), none of the indicia suggesting that a ballot for section 111 had been called are present. It is entirely unclear from the text of the email, or the surrounding circumstances, that a ballot had been called.
12. Having regard to the evidence as a whole, I find the email of 23 June 2023 contained no more than a request to express agreement to a policy of on-charging additional costs. It did not constitute notice of a ballot. As such, I reject the applicant's submission that a ballot was ever held or that a resolution was passed by the Committee to levy an additional annual fee on the respondent in the sum of $100,000 in accordance with such a ballot.
13. Given these findings, it is unnecessary to determine whether or not the purported resolution is a valid one.

1. As a result, the fee notice relied upon by the applicant, which purported to have been issued on the basis of such a resolution is invalid and cannot be relied upon by the applicant.
2. The application is dismissed.
3. Costs in this proceeding are reserved.
4. The parties are directed to file with VCAT and serve on each other written submissions as to costs, not exceeding three pages, by 5 June 2025.

[1] Paragraph 51 of the applicant's closing submissions.

[2] Additional insurance obligations arise under section 61 and 61A in relation to buildings located above or below common property, a reserve a lot and in respect of multiple single dwellings, not relevant for the purpose of these proceedings.

[3] See paragraph 51 of the applicant's closing submissions.

[4] See paragraph 44 of the applicant's closing submissions.

[6] See paragraph 44 of the applicant's closing submissions.

[7] [1998] HCA 28; 194 CLR 355 at [91].

[8] J & G Knowles & Associates Pty Ltd v Owners Corporation RP12247 [2014] VCAT 98 at [43]. See also: The Owners Strata Plan No 57164 v Yau [2016] NSWSC 1056.