Compensation awarded to lot owners for fees unlawfully demanded

Distinction between 'services' which are the statutory 'function' of an owners corporation to carry out under the Owners Corporations Act 2006 and a 'service' under s 12 that might be provided by the owners corporation at cost to a lot owner using the service provided that it is authorised by special resolution; Energy Technology Australia Pty Ltd v Owners Corporation PS 439401J [2017] VSC 145 applied; Owners Corporation No 1 PS 511693Q v Sulomar and anor (Owners Corporation) [2012] VCAT 944, Lim v Owners Corporation PS714612M (Owners Corporations) [2018] VCAT 1995; Cheung v Owners Corporation No 1 501391P (Owners Corporations) [2019] VCAT 598 and Owners Corporation 1 Plan No. PS735439F v Singh (Owners Corporations) [2022] VCAT 389 considered.

Strict compliance required with the regulatory and governance protections of the Owners Corporations Act 2006 - discussion of statutory responsibilities of an owners corporation as a statutory entity created by the Subdivision Act 1988 (Vic) with specific statutory functions and duties under the Owners Corporations Act 2006 (Vic).

Multiple 'owners corporation disputes' by lot owners and former manager including claims for breach of rules, breach of statutory duties, in detinue and conversion, breach of contract, and claims for breach of duty of care for pure economic loss, and counterclaims claims by owners corporation against former manager for breach of contract and statutory duty and in restitution for mistaken payments

Doctrine of functus officio - VCAT's limited statutory power to reopen orders. Director of Public Prosecutions (Vic) v Edwards [2012] VSCA 293; (2012) 44 VR 114 and Lockwood v Ecoliv Buildings Pty Ltd [2017] VSC 109 at [75] and The Big Apple Group Pty Ltd v Melbourne City Council [2020] VSC 393 applied.

1, 2, 3, 7, 8, 9, 10, 14 October 2024, 10, 11, 12, 13, 16 December 2024 and 4 March 2025.

Searle v Owners Corporation PS302397L [2026] VCAT 256

1. Owners Corporation PS302397L must pay:
   1. Byron Searle $770 plus interest of $339 (calculated from of the date of commencement of the proceeding on 18 November 2021, at the rate of 10% until date of this order);
   2. Ursula Searle $610 plus interest of $268 (calculated on the same basis);
   3. Michael Abell $1,645 plus interest of $725 (calculated on the same basis).
2. The claim by Byron Searle, Ursula Searle and Michael Abell for refund of fees levied by Owners Corporation PS302397L is dismissed.
3. Owners Corporation PS302397L must pay Mornington Resorts Pty Ltd the following amounts on its claims:
   1. On its claim for unpaid invoiced fees for service and materials to 30 June 2021:

$13,576.53 plus interest of $6,386 (calculated from 31 July 2021 until date of this order, at the rate of 10%);

1. On its claim for detinue and conversion of property after 31 July 2021:
   1. Non-returned items:

$3,305 plus interest of $1,554 (calculated from 31 July 2021 until date of this order at the rate of 10%); and

$1,800 plus interest of $239 (calculated from 14 December 2024 at the rate of 10%);

1. On its claim for economic loss after 1 July 2021:

1. The counterclaim made by Owners Corporation PS302397L is dismissed

1. Costs are reserved in accordance with the reasons accompanying this Order

Mr P K Searle, director with Mr Tung, solicitor, of Hunt McCullough Kolias & Co, Barristers and Solicitors

Mr P K Searle with Mr S Tung of Hunt McCullough Kolias & Co, Barristers and Solicitors

Mr S Tung, solicitor, of Hunt McCullough Kolias & Co, Barristers and Solicitors

Mr J B Masters, with Ms S Weinberg instructed by Mr A Vicendese, Best Hooper, Lawyers

Mr J B Masters, with Ms S Weinberg instructed by Mr A Vicendese, Best Hooper, Lawyers

Mr P K Searle, director with Mr S Tung, solicitor of Hunt McCullough Kolias & Co, Barristers and Solicitors

1. Portsea sits on the far end of Mornington Peninsula, just before it narrows at Point Nepean National Park. The coastal town's northern front beach is on modern day Port Philip Bay. Its wild ocean back beaches off Bass Strait, with their ancient rock formations, are a short distance to the south.
2. The elements of salt, sea, sand, and sun make ongoing maintenance and repair of the 'Portsea Village Resort' - as its lot owners have affectionately called it since 1991 - a constant challenge for them and their owners corporation and its committee members.
3. But the appeal of the small bayside town is obvious.
4. Its postcard setting welcomes residents and holiday makers to the seaside all year round. Portsea Pier splinters into the shallow waters of the bay. Parents and children try their luck fishing from its elevated vantage points. Scuba divers venture further afield while sailboats bob on the water in the bay. Colourful beach boxes line the foreshore. Coastal walks abound. Hop on the ferry and in only a short while, past the heads, you reach the opposite side of the bay in Queenscliff.
5. Generations of young and old form lifetime memories in the idyllic setting. The owners from time to time of the 31 lots in 'Portsea Village Resort' are some of these people.
6. The residential apartments in the lots are all privately owned. When the hearing before the Tribunal drew to its conclusion, after weeks of evidence and argument in the summer of 2025, there were 27 apartment owners. Most owned one apartment. Four owned two.
7. While some were new, others had been lot owners for decades. The single constant has been their body corporate, Owners Corporation PS302397L. It was created in November 1991 on registration of plan of subdivision no PS302397L under the Subdivision Act 1988 (Vic) ('Subdivision Act'), s 28. It is an 'unlimited owners corporation' and the only owners corporation for the subdivision of land in the plan.
8. I will call it 'the OC'.

PLANNING PERMIT - LAND SUBDIVISION AT 3765-3789 POINT NEPEAN ROAD, PORTSEA

1. The land in subdivision is located at 3765-3789 Point Nepean Road, Portsea, on the corner of Back Beach Road just across the park from the Portsea Pier.
2. The original 1991 planning permit permitted the use of the land as a hotel.
3. Seemingly, under that permitted land use, over many years the privately owned apartment lots, carparks and other amenities built on the common property have operated as 'resort' complex for owners and their guests, and for the general public to book from the individual lot owners. When an owner's guest or the general public wanted to occupy one of the lots, they could go through the 'booking manager' at the resort, who was appointed by each of the lot owners individually under an apartment management authority. The same manager appointed by the OC as the 'resort manager' as well as the manager for the OC itself, would then issue them a security key pass upon their arrival at the reception of Portsea Village Resort.

1. The site plan from the plan[1] is reproduced in Diagram 1 below:

1. Under the Subdivision Act and Owners Corporations Act 2006 (Vic) ('OC Act'), 'land' includes buildings and airspace.[2] The 'subdivision' of this land is over the multiple storeys of the buildings constructed on it, to create 31 private 'lots' in 3-dimensional space and attendant common property.
2. The built-form of the current 4-storey complex is in an L-shape. Some of the apartment lots have balconies in front that form part of each privately owned lot. All have car spaces to the south that also form part of each lot. As a whole, the land in the subdivision affected by the OC has some two acres of 'common property'.

1. As Torrens Title land, the lots in the plan are each owned by the individual lot owners in fee simple, to live in or rent out or use as they please consistently with the uses permitted by the planning permit and obligations on them under the OC Act and rules of the OC.
2. As owners of their lots, they also each own the fee simple interest in the common property, as 'tenants in common' in accordance with their 'lot entitlement' in the plan of subdivision.
3. Ownership rights in Victorian land subdivisions affected by an 'owners corporation' have existed in this way since the enactment of the Subdivision Act.[3]

1. Since 2006, following the enactment of the OC Act, in Victoria the 'body corporate' that is created on registration of plan of subdivision is called an owners corporation so as to highlight that it is the body corporate for all the lot owners from time to time.
2. Also, upon that OC Act coming into force, the statutory 'functions' of the owners corporation and of its committee of management and of any manager for the owners corporation, were placed in the OC Act rather than the former regulations under the Subdivision Act.[4]
3. Under the OC Act, those 'functions' include statutory duties.
4. An owners corporation is not a private company. It is a statutory body corporate with statutory functions, duties and authority. Its powers are defined by the legislation and regulations that govern it and by the valid rules it makes under that legislation.
5. Since 2006 the OC Act has placed a wide range of responsibilities - as statutory functions and duties - on the owners corporation, its committee of management, any manager appointed for the owners corporation as well as on lot owners and their tenants and occupiers.
6. The OC Act has the following relevant definitions in s 3:

land affected by an owners corporation means the lots the owners for the time being of which are members of the owners corporation together with the common property for which the owners corporation is responsible;

lot has the same meaning as it has in the Subdivision Act 1988;

common property means land shown as common property on a plan of subdivision or a plan of strata or cluster subdivision;

lot affected by an owners corporation means a lot the owner for the time being of which is a member of the owners corporation;

lot owner, in relation to an owners corporation, means an owner of a lot affected by the owners corporation;

owner has the same meaning as it has in the Subdivision Act 1988,

owners corporation means a body corporate which is incorporated by registration of a plan of subdivision or a plan of strata or cluster subdivision;

unlimited owners corporation has the same meaning as it has in the Subdivision Act 1988;

plan of subdivision has the same meaning as plan has in the Subdivision Act 1988;

rules in relation to an owners corporation, means the rules of the owners corporation for the time being in force.

1. The common property affected by the OC for the land subdivision of 'Portsea Village Resort' is 'ALL THE LAND IN THE PLAN EXCEPT LOTS 1 TO 31'. This is described in the NOTATIONS to the plan of subdivision, on PSO1.[5] This has been so since the plan of subdivision was registered on 14 November 1991 and will remain so unless the lot owners ever unanimously consent to amend the plan of subdivision.

25. By the Subdivision Act, the common property is registered in the name of the OC as 'nominee' for the lot owners from time to time, being the registered proprietors of this Torrens Title land. Placing the common property in the name of the owners corporation as 'nominee' is purely for conveyancing convenience. It enables each lot to be sold or leased without the need for any further conveyance of the lot owner's ownership interest as tenant in common in the common property, which always attaches to and runs with the ownership of the individual lots and cannot be dealt with separately.[6] An owners corporation itself, as the body corporate for its members, does not actually own the common property as many people think.

1. Thus, at Portsea Village Resort, the common property is owned by the 'lot owner' members of the OC.
2. The statutory 'function', and thus legal responsibility and duty, of the OC to its lot owner members is to 'manage and administer' the common property and to 'repair and maintain' it together with 'the chattels, fixtures, fittings and services related to the common property or its enjoyment' and the 'equipment and services for which an easement or right exists for the benefit of the land affected by the owners corporation or which are otherwise for the benefit of all or some of the land affected by the owners corporation', (amongst other things) described in s 4 of the OC Act (set out later).
3. At 'Portsea Village Resort', the area of land in the plan that the parties call the 'resort' complex, is contained entirely on the common property affected by the owners corporation. While individual lot owners have their own private keys, for their invitees and guests to the 'resort', access to much of land is gained by security key cards belonging to the OC and controlled by the OC.
4. Those security key cards (and the digital system that controls them) belong to the OC and are a 'service' for which the OC is responsible to 'manage and administer' for the benefit of all its lot owner members, and their invitees occupying their private lots.

1. The common property at Portsea Village Resort is extensive.
2. Developed in the early 1990's to create the 3-dimensional built form on the land before registration of the plan of land subdivision on 14 November 1991, the common property was substantially repaired and refurbished prior to 2020 under the direction of the 'Building sub-committee' of the OC's committee, chaired by Mr Brian Cox, which oversaw its then owners corporation manager and resort manager - Mornington Resorts Pty Ltd, a private service company owned by Mr Peter Searle - to organise and commission extensive repairs and refurbishments.
3. The 'resort' complex on the common property currently includes the following amenities and services:
   • It has two swimming pools and spas (indoor and outdoor), a sauna, an indoor squash court and outdoor tennis court, a gym, and about 5,500 m2 of landscaped gardens.
   • Enveloping the 31 parking spaces to the south (which form part of each lot used by owners, tenants and invitees), the ingress and egress 'driveway' from Back Beach Road and the northern 'driveway' from Nepean Highway, all form part of the common property.
   • The stairs and walkways to the rear of the private apartments also all form part of the common property.
   • A communal linen area is also located within the common property, used by lot owners and the resort manager. One is on the first storey by the stairs.[7]
4. As common property owned by the individual lot owners as tenants in common, their tenants and guests are free to use and enjoy it as an incident of their ownership as tenant in common, unless the lot owners, as members of the OC voting collectively, have passed a resolution to grant rights to exclusive use and enjoyment to another.
5. Under the OC Act, the owners corporation has certain statutory powers which I will discuss shortly. One statutory power is set in s 14 of that Act. It authorises and empowers the OC, by special resolution of the lot owners voting as members of the OC, to 'lease' or 'license' the whole or any part of the common property to a lot owner or other person.
6. In the common property of the 'Portsea Village Resort' in the northeast corner - called the 'recreation building' on the plan - there is a gym with conference room facilities. Diagonally across the lawn and pool is the entry, waiting area, restaurant and offices as shown in the diagram below:[8]

1. The OC, with the apparent authorisation of the lot owners over the years, has leased or licenced the restaurant and office areas for those purposes.
2. The restaurant, which has had different commercial operators over many years, provides meals for lot owners and their tenants and invited guests to purchase. I was also told at the hearing it is also open at different times to members of the general public and at different times its operator has held a liquor licence.
3. The reception area in the common property is used by staff of the manager.
   • Prior to 30 June 2021 it was used and occupied by the former 'manager', Mornington Resorts Pty Ltd, appointed under contractual arrangements with the OC to act as the manager for the owners corporation ('OC manager') and 'resort manager';

• Since 1 July 2021 the OC admits that the reception area has been occupied under 'non-exclusive licence' from the OC by the current 'manager', Portsea Village Resort Pty Ltd.[9] The OC does not admit, and its current Chairman contends, that it does not act as the OC manager.

1. Although there is some dispute about whether there had been any special resolution to grant a licence of the common property by the OC to Portsea Village Resort Pty Ltd, it is apparent that a licence was prepared and signed on 1 July 2021.[10]
2. Below is the plan showing the licensed area under that agreement:

1. Part of the complexity that has arisen in this dispute that burst like a storm in this peaceful Portsea sanctuary in early 2021, is disagreement or perhaps misunderstanding about what the parties meant by 'manager' and what is meant by 'Manager' under the OC's statutory 'rules' that govern the obligations of the OC and its committee and lot owner members and the occupiers of their lots.
2. I will return to that shortly, I note for the moment that it is not disputed that the OC's original rules from 1992 were in force until they were apparently revoked by special resolution of the members at an AGM of the OC held on 6 November 2022, when the then lot owner members of the OC voted on new rules lodged under s 142 of the OC Act[11] by the OC's solicitors acting in this case.[12]
3. It is the operation of rule 6 of the original '1992'Rules' of the OC during the appointment of Portsea Village Resort Pty Ltd on 1 July 2021 (and not its current rules) that are relevant to this dispute.[13]
4. Another part of the complexity is that the 'manager' appointed by individual lot owners to take bookings for their apartments - as their 'apartment booking manager' - has not since Portsea Village Pty Ltd's appointment by some lot owners since 1 July 2021 to act for them at the reception desk at the resort correlated with the 'manager' appointed by the OC to act as its owners corporation manager and its resort manager, as had been the case before 1 July 2021.
5. However, at all times during the events in question in this dispute, the OC through its committee has authorised that private company to control the OC's security key card system from the reception desk located on the common property. And, while originally the OC manager was also the resort manager providing services to guests for the OC - from 1 July 2021 that changed under new management arrangements authorised by the OC committee.
6. As is recorded in the minute of the OC's AGM on 3 October 2021:[14]

It is also noted that Portsea Village Resort Pty Ltd (PVRpl), with the approval of the Owners Corporation Committee has introduced a series of charges for the services it provides... The object of these is to ensure that PVRpl is fully compensated for the services it provides.

1. This dispute contains separate claims between 3 (now former) lot owners and their booking agent, Mornington Resorts Pty Ltd against the OC, and dozens of counterclaims by the OC against Mornington Resorts Pty Ltd as its former manager that span some 6 years prior to the bringing of proceedings. They fall into the following categories.

A. APPLICANT LOT OWNERS' CLAIMS AGAINST THE OC

1. The applicants, Byron and Ursula Searle and Michael Abell, in their capacity as former lot owners, are suing the respondent owners corporation for compensation alleging that while they were lot owners, the OC breached rule 6.1 and 6.2 of the OC's 1992 Rules by refusing to issue security key cards to their Invitees "Upon arrival to occupy or attend a Lot" after 1 July 2021.
2. Rule 6 of those 1992 Rules stated at all relevant times:[15]

6.1 All security key cards to the Common Property or any Lot are to be Issued by the Manager.

6.2 Upon arrival to occupy or attend a Lot a Member or Member's Invitees[16] must register with the Manager and provide details regarding the number of people occupying the relevant Lot and the expected duration of the occupation.

6.3 Upon registration under rule 6.2 the Manager will issue security key cards to however many occupants of a Lot as the Manager thinks fit.

6.4 All security key cards are to be returned to the Manager upon final departure by the occupants of any Lot.

6.5 Before allowing or permitting any persons to occupy a Lot a Member must give the Manager notice in writing of his or her intention to do so.

6.6 Before inviting any person including a cleaner, electrician, plumber and real estate agent to attend a Lot a Member or the occupants of a Member's Lot must notify the Manager who must advise the Member or occupants of a date and time when the person may enter the Common Property to attend the Lot.

6.7 The date and time set by the manager under rule 6.6 will be such date and time as the Manager reasonably determines.

1. It was accepted by the parties that 'security key cards' are different from lot owners' private keys. The electronic 'security key cards' are like the plastic programable pass card that a hotel issues, that gives a hotel guest access to their room, the gym and pool and other hotel facilities available to guests.
2. There is also no issue that the lot owners had their own 'hard' keys which gave them individual access to their lots and to common property in the land subdivision.
3. But the practical issue for the use and enjoyment of resort complex common property of the Portsea Village Resort is that 'Member's Invitees' who booked an apartment lot as guest of the lot owner, needed a security key card from the OC to be able to access different parts of the common property and to open the apartment they had booked (unless they had the lot owner's key). If more than one guest registered at reception, they might need more than one 'security key card' to use the resort facilities during their stay.
4. As former lot owners, Byron and Ursula Searle and Michael Abell claim that the OC breached Rule 6 by not providing the security key cards free of charge, which had been the practice prior to 1 July 2021 as a 'service' provided by the OC, for which they paid fees levied by the OC as annual fees to recoup the costs of management of the OC and maintenance and management of services to the common property and lots in the land affected by the OC as their owners corporation. They claim that the 'new measures' put in place by the OC with the new manager at the resort for issuing 'security key cards' and authorising it to charge a service fee were unlawful and breached the OC's statutory duty to them as lot owners under s 141 of the OC Act to comply with its own rules.

• 54. They separately allege that the OC entered into licences or purported licences for the common property of the resort complex with the new manager, Portsea Village Resort Pty Ltd (and others) without special resolutions being passed by the members of the OC as required by s 14 of the OC Act.[17]

1. The individual losses they personally claim as applicants are modest. They simply seek a refund of the money that they paid, or their own booking agent Mornington Resorts Pty Ltd paid on their behalf, after 1 July 2021 before they each sold their lots.
2. As a distinct claim they also seek the refund of a fee levied against them by the OC when they were lot owner members of the OC, which had been levied against all lot owners, for the OC's legal costs in connection with these Tribunal proceedings.

1. Their booking agent, Mornington Resorts Pty Ltd, is also suing the OC for loss suffered, alleging that the OC unlawfully authorised and established the new resort management arrangements and 'new measures' for issuing and charging new fees for 'security key cards', and that it did so to target it as the manager previously appointed by the OC for the Portsea Village Resort. It claims that the practical effect of the 'new measures' required its lot owner customers or its own staff on their behalf as booking agent, to personally attend the land at Portsea to give security key cards to Invitees of the lot owners for whom it acted. Unless someone attended to pay the impugned new fees being charged at the resort reception desk, guests' contracted accommodation bookings could not be performed by its customers. That claim for economic loss against the OC is for many hundreds of thousands of dollars alleged to have been suffered as a loss as a direct result of the 'new measures'. In its final amended form at the hearing, their claim for pure economic loss was brought for alleged breach of a statutory duty said to be owed by the OC to it as a service provider to its lot owner customers, under the tort of negligence and for breach of an alleged implied term said to be contained in its former management contract with the OC which implied term it alleged operated after that contract had been terminated by agreement on 30 June 2021. Despite having threatened the OC in a legal demand sent on 23 October 2021 to bring a claim for tortious interference with contractual relations, no such cause of action was advanced against the OC in these Tribunal proceedings.[18]
2. Mornington Resorts Pty Ltd also makes other claims for payment for services and material supplied to the OC after Terms of Settlement had been agreed with the OC on 14 May 2021, under which it agreed to retire as manager for the OC and resort manager on 30 June 2021.
3. Its other group of claims against the OC is for detinue and conversion of belongings it was unable to retrieve by 30 June 2021 and alleges was prevented from doing so by the OC. That claim changed during the running when the OC conducted a search after the conclusion of evidence in 2024 and 'found' many items which it allow Mornington Resorts Pty Ltd to collect before Christmas.
4. All these claims are brought in proceeding OC2639/2021, which the OC denies on their merits on various grounds.

1. The OC has counterclaimed in proceeding OC1321/2022 against Mornington Resorts Pty Ltd, on grounds of restitution for mistaken payments and alternatively for alleged breach of express and implied contractual terms and statutory duties owed to it by the former owners corporation manager and resort manager for the 'Portsea Village Resort', spans a period of 6 years prior to 1 July 2021.
2. As labelled and described in the OC's Counsels' opening and closing written submissions they are as follows:[19]
   • Business operating expense claim - $26,288.17
   • Duplicated charges claim - $724.24
   • Cleaning charges claim - $25,181.74
   • Maintenance works claim*
   • Caretaker accommodation claim*
   • Restaurant business claim*
   • Restaurant operating expenses claim - $79,557.71
   • Conference room business claim - $3,650
   • Conference room business charges claim - $5,572.27
   • Diving school business claim - $1,584.96
   • Cost of labour materials claim - $62,112.60.
3. The OC relies on its counterclaims by way of a defence of set-off to Mornington Resorts Pty Ltd's claims for payment against it.
4. That expansive multi-tentacled counterclaim totalling over $200,000 is denied by Mornington Resorts Pty Ltd on the merits of each individual counterclaim and on the basis that all the counterclaims are precluded by a mutual contractual release contained in Terms of Settlement dated 14 May 2021.
5. The 'Maintenance works claim', 'Caretaker accommodation claim' and 'Restaurant business claim' were abandoned by the OC after evidence had been presented (and led to an amendment to the points of counterclaim to take them out).

1. The hearing was conducted over 14 hearing days on 1, 2, 3, 7, 8, 9, 10, 14 October 2024, and 10, 11, 12, 13, 16 December 2024, concluding on 4 March 2025 when parties made closing submissions to the Tribunal on evidence and the law.

Amended points of claim, counterclaim and defence

1. There were many amendments made to the claims and counterclaims during the running of the hearing.
2. The points of claim and defence which ultimately framed the issues for final determination by the Tribunal were:
   • Applicants' amended points of claim dated 2 October 2024 (filed pursuant to leave granted by the Tribunal on 2 October 2024);
   • The OC's points of defence to the amended points of claim and further amended points of counterclaim dated 14 October 2024[20] (filed pursuant to leave granted by the Tribunal on 14 October 2024);[21] and
   • Mornington Resorts Pty Ltd's original defence to counterclaim dated 29 November 2022.[22]

1. As the parties did at the hearing, I will refer to the applicants in proceeding OC2639/2021 as 'the applicants', recognising that Mornington Resorts Pty Ltd is also a respondent to the counterclaim brought by the OC in proceeding OC1321/2022.
2. As I have said, I will refer to Owners Corporation PS302397L as 'the OC' or the respondent (recognising that it is also an applicant by counterclaim in proceeding OC1321/2022).

1. The Tribunal has a discretion under s 62 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) ('VCAT Act') whether to allow 'representation of parties' in any proceeding and as to whom it may permit to speak on behalf of a party.
2. In exercising that discretion the Tribunal must be satisfied that it is procedurally fair to allow a party to have representation by a 'professional advocate'. It also needs to be satisfied that the person who is authorised by a party to represent them is capable of discharging the onerous responsibility of representing them as a party in the legal proceeding, be it an inter partes civil dispute in the original jurisdiction of the Tribunal like this case, or an application of a different legal nature.
3. With the leave of the Tribunal, Mr Masters and Ms Weinberg of Counsel appeared at the final hearing for the OC and were instructed by Best Hooper, solicitors. The OC is a statutory body corporate that represents all its lot owner members. It is thus fair to it and them and not unfair to the applicants that it be represented by qualified lawyers. The lawyers for the OC had also been responsible for preparing all the OC's Tribunal books of evidence (which I shall come to shortly) and they were in a position to assist the Tribunal to marshal the extensive documentary evidence tendered in the case.
4. Mr Peter Searle, a retired barrister and company director, was given leave to appear for his children Bryon and Ursula Searle, and for his company Mornington Resorts Pty Ltd. That was fair to them and not unfair to the OC which had two barristers representing them. However, Mr Peter Searle was permitted to represent his family and interests not as a legal practitioner but in a capacity as a lay individual having legal training and experience, and for his company as its director.
5. Mr Tang, solicitor on the record representing all applicants, was also given leave to appear to represent all the applicants. He, and not Mr Peter Searle, represented his other client Mr Abell. What occurred during the hearing was that Mr Tang left the leading of evidence and advocacy to Mr Peter Searle who had the litigation experience of a former barrister. Mr Tang was given every opportunity to speak for his other client, and on every occasion he was content to adopt on behalf of Mr Abell the questioning, tendering of evidence and submissions put by Mr Searle. I should add, there was probably not anything further he could have added and by electing to adopt that course it assisted the Tribunal to keep the length of the lengthy hearing to a minimum.

1. At the hearing the parties tendered into evidence many thousands of pages of documents in numerous Tribunal Books, submitted to be relevant to the various claims, counterclaims and defences. During the hearing they also tendered additional documents. Tribunal Book 4 became redundant and was incorporated into Tribunal Book 1.
2. They are listed in Appendix A.[23]

1. Tribunal Book 1 (of 4 volumes) was one of 7 Tribunal Books. Included amongst the 1485 pages of Tribunal Book 1 and unpaginated Tribunal Book 5 are the various witness statements and affidavits of witnesses called by the parties, who also gave oral evidence to the Tribunal and were cross examined.
   • For the applicants they comprised:

20 July 2021 (affidavit and exhibits filed in County Court proceeding CI-21-02992)[24]

1. The contract called 'Terms of Settlement' dated 14 May 2021 between the OC and Mornington Resorts Pty Ltd is in Tribunal Book 1.[26] The entire Brief to Mediator is in Tribunal Book 2.[27]
2. During the hearing the Tribunal received oral evidence from each of:
   • Byron Searle (lot owner);
   • Michael Abell (lot owner); and
   • Peter Searle (director of Mornington Resorts Pty Ltd),

• John Mirabito (OC committee Chairman, director and sole shareholder of Azzure-Pier Street Pty Ltd (lot owner), director and sole shareholder of Portsea Village Resort Pty Ltd);
• Doug Cox (OC committee Secretary and former OC committee Chair, secretary of Portsea Village Resort Pty Ltd);
• Jo Higgins (employee of Portsea Village Resort Pty Ltd);
• Paul Crichton (maintenance officer for the OC); and
• Jeremy Brown-Greaves (external accountant for the OC).

1. I mention their positions to indicate that this was generally why their evidence was called as relevant to the disputed issues, noting that each also had evidence to give about other things not necessarily related to their positions.
2. As I mentioned, Mr Peter Searle led the evidence for the applicants and cross examined each of the OC's witnesses (with Mr Tang electing not to ask any further questions). Counsel for the OC, Mr Masters leading Ms Weinberg, led the evidence for the OC and cross examined the witness called by the applicants.

1. In their closing submissions the parties relied on written submissions filed under the Tribunal's directions at the conclusion of evidence in December 2024, being:
   • Applicants' closing submissions dated 25 February 2025 (81 pages) and list of authorities;

• The OC's closing submissions dated 25 February 2025 (50 pages).

1. On the day of final hearing on 4 March 2025, during submissions the Tribunal requested that some additional authorities to be filed that had been referred to in closing submissions. Three weeks later the applicants filed:
   • Applicants' submissions in reply dated 25 March 2025 (15 pages); and
   • Additional authorities.

• 85. On 27 March 2025, the OC objected to the filing of those late submissions.[28] Leave had not been given to file them and accordingly I instructed the principal registrar to respond that the parties had correctly filed a further list of additional authorities but that the Tribunal will give no regard to the applicants' submissions in reply filed on 25 March 2025.[29]

1. To give context to how this dispute erupted in 2021 and to my evidentiary findings on the reliability of witnesses, it is necessary to say something about the difficult circumstances in which the OC and the Portsea Village Resort was operating at the time and to properly introduce the two main actors.
2. It is no understatement to say that there have been strong personality clashes between the leading actors in this case, being:
   • Mr Peter Searle - whose private company, Mornington Resorts Pty Ltd, had been the incumbent owners corporation manager ('OC manager') and resort manager for Portsea Village Resort under a Managing Agent Agreement ('MAA') dated 16 January 2016 made with the OC, as well as 'booking agent' to those lot owners who appointed it to manage bookings and collect rental for their private lots under separate Apartment Management Agreements ('AMA'); and
   • Mr Mirabito - who through his private company bought his lot in November 2019[30] and was appointed Chairman of the OC on 23 November 2020.
3. It is also my impression, and they both told me in their different ways, that each man was passionate about family and about the Portsea Village Resort and its seaside appeal.
4. Mr Mirabito states in his witness statement,[31] and he also told me in his evidence in chief with considerable sadness, of his memories fishing as a child with his dad on the Portsea Pier. He said he had purchased his apartment for use by his father, who very sadly passed away before ever having the chance to enjoy it.
5. Mr Peter Searle states in his witness statement and he also told me in his evidence with considerable reminiscence, that after he and his wife had purchased their own lot many years earlier, as a parent he had then personally helped his children, Byron and Ursula, to buy their apartments in the resort.
6. Each of these men had been successful in their own way in life and pursuing different professional and business careers. Each were men who displayed utter confidence in their own abilities to get things done. But to each other, these two men were gritty irritants who did not get along, did not like each other, and between whom there was a complete lack of trust. While they had a common passion for Portsea Village Resort, their interests in it as an investment and as a resort complex were vastly different, and the two clearly never saw eye to eye.
7. I have mentioned already that Mr Peter Searle was a retired barrister. He had taken up the management role of Portsea Village Resort later in life, he told me, to restore it to its potential for the lot owners, being unhappy with the previous management company, which had allowed the place to fall into disrepair. He was passionate about the seaside appeal of Portsea Village Resort as a destination and as an investment and clearly enjoyed the personal challenge that restoring and running and maintaining the place gave him, telling me about the restoration and repair work they had to do and about the restaurant and resort activities, including scuba diving in the pool, he had sought to promote while his company Mornington Resorts Pty Ltd managed it until 30 June 2021.
8. Mr Mirabito's line of work as a petrol station developer was something he too had a passion for. In his witness statement and in evidence in chief he told me about dozens of development companies he had set up. He also told me about the great deal he got on the apartment he bought for his father and how staggered he was at the time when the real estate agent selling it told him the asking price, which he considered cheap. He said he had been told that the reason was that the management fees for maintaining and running the resort were high. After his father died, his passion for the Portsea Village Resort turned to doing what he thought needed to be done to change that.
9. But another more significant event happened which has had a material bearing affecting all the lot owners of Portsea Village Resort at the time, and on the OC.
10. As is well known, the COVID-19 pandemic officially started on 11 March 2020 and did not end as a public health emergency until May 2023. It caused severe social and economic disruption, including supply chain disruptions and supply shortages. Normal human interaction reduced around the globe as countries battled to curtail it before vaccines could be developed at rapid speed and be publicly administered in safe quarantine environments that began in late 2020 and continued into 2021 and 2022.
11. In this State, the public health restrictions on personal movement operated under changing settings as new outbreaks emerged. The changing conditions it must be recalled made it difficult for people running businesses and managing owners corporations to organise and do things that otherwise might have been more straight forward to organise and do.
12. Throughout the period, travel restrictions, business restrictions and regional 'lockdowns' were all measures that people accepted and became acclimatised to. What at the time was called 'Covid normal' was anything but normal for human interaction and led to many quiet abnormal behaviours. They were compounded when people suffered personal loss or were grieving, even though they might not have been aware that this very human condition was afflicting them. Anger and resentment could quickly bubble to the surface and be directed at objects perceived to be the immediate cause.
13. In my assessment of what took place during the events in question, I have taken into consideration that people's actions and ability to do things were significantly impacted by the toll that the Covid-19 pandemic took on all people in different ways, whether young or old, underprivileged or privileged. Human nature, being what it is, can cause people to interpret and react to things differently in an emergency environment. Human memory being what it is, can lead witnesses not to recall or to reinterpret things from the perspective they viewed things at the time and when looking back through memory.

1. It is accepted that from July 2014 Mornington Resorts Pty Ltd had been appointed by the OC as the manager for the OC by a unanimous resolution of lot owners passed at a special general meeting ('SGM') on 5 March 2014.[32]
2. Its first contractual appointment by the OC was under a letter agreement dated 25 June 2014. That contractual appointment was for two years, commencing 1 July 2014,[33] and was on largely the same terms as the previous manager, whose previous contract with the OC was adapted by that letter.
3. On 16 January 2016, Mornington Resorts Pty Ltd was then re-appointed by the OC as the manager for the OC and as its 'resort manager' at Portsea Village Resort under a new written contract - the MAA - for an initial term of 3 years and 6 months.
4. From 1 July 2019, the MAA was then renewed under its cl 5 for a further term of 3 years, until 30 June 2022.
5. However, the MAA ended on 30 June 2021 by mutual agreement between the OC and Mornington Resorts Pty Ltd under contractual 'Terms of Settlement' between Mornington Resorts Pty Ltd and the OC following a mediation conducted under the MAA.
6. During that entire period from July 2014, acting for the individual lot owners who appointed it as their booking agent, Mornington Resorts Pty Ltd also wore a third hat - expressly contemplated by the MAA (and the letter agreement that preceded it) - as their 'apartment booking manager', acting as their booking agent to manage their accommodation bookings and collect lot rental income for them. That role is a distinct legal role, involving different agency and management obligations to different contracting principals.
7. As with the previous Portsea Village Resort management arrangements, not all lot owners booked out their apartments. Thus not every lot owner chose to use Mornington Resorts Pty Ltd's services as booking and rental collection agent.
8. But each lot owner in the OC benefited from the services that Mornington Resorts Pty Ltd provided to their OC as the 'manager' appointed by it under the MAA.
9. It is also not disputed that:
   • between 2014 and June 2021, Byron Searle, as an employee of Mornington Resorts Pty Ltd, acted as both manager for the OC and the resort manager, and was the live-in caretaker, restaurant manager, on-site manager, receptionist and key-card operator;[34] and
   • Mornington Resorts Pty Ltd handed out security key cards to lot owners requesting them and their guests to give them access the apartments and common property at Portsea Village Resort, there being no additional fee collected for that service.
10. Mr Byron Searle also gave direct evidence in his witness statement, and I accept, that:[35]

Before July, 2021, [the OC] had complied with its own Rule 6 and the OC Manager [namely Mornington Resorts Pty Ltd] had always given key cards to owners and their invitees upon arrival without notice. I was at reception and/or caretaking on many occasions for seven years from 1 July 2014 until June 2021. During that period, I issued, coded and gave keycards to owners and their invitees, who often arrived at Portsea Village Resort without notice.

1. Where facts are in issue, the Tribunal's role is to assess the evidence presented to it and make findings of fact based on that evidence.
2. It is often said that contemporaneous documents can be more reliable than human memory. In this case there are many business records relating to the management of the affairs of the OC that fit that bill. Where they fall into that category I have preferred their contemporaneous reliability as a business record over people's ability to recollect many years later.
3. However, in this battle over the management of the Portsea Village Resort during the COVID-19 pandemic there are many documents produced that I have found not to be so reliable. Therefore, I have had to assess their reliability by considering the author of the document assessed against the evidence given by witnesses and other documentary evidence.
4. It is convenient to record my findings on the reliability of witnesses and, in particular, the main witnesses.

1. I found Mr Peter Searle to be a truthful witness. He gave his evidence to the Tribunal to the best of his knowledge about what he could recall of events and about what he could not recall. He answered questions put to him directly.
2. In listening to him give his evidence and in observing him, despite his ostensible outward appearance of confidence I have nevertheless taken into account the effect of events on both his company, Mornington Resorts Pty Ltd, and on his two adult children, who had now both sold their lots at Portsea Village Resort. I have considered that context as relevant to my assessment of his evidence as there is an obvious element in this case that cannot be overlooked, being that the legal claims brought by his company against the OC are a way that he personally has sought to vindicate his rights against the OC now under the control of Mr Mirabito, in a legal arena in which - by his former profession - he thrives and is more in control, far away from Portsea Village Resort where he lost control and was overthrown in his and his company's longstanding role as manager wearing different hats.
3. As I have noted, he had solicitors acting but elected not to brief independent Counsel and instead to conduct his company's case and the defence of the counterclaim against it personally.
4. While that is understandable and is his company's right in VCAT proceedings to seek leave to do so as its director,[36] it is not always desirable for lawyers or former lawyers to act in matters directly relating to their financial interests in legal disputes. It can be hard for people to be objective in legal matters personally affecting them.
5. Despite that, and despite the rivalry between the two men that extended from the peaceful seaside resort into the Tribunal hearing conducted in Melbourne, there was a fundamental difference between the two men as witnesses, both having their strong personalities and evident interpersonal dislike.
6. Mr Searle well understood his obligation as a witness giving evidence under oath to tell the truth to the Tribunal. He also completely understood the difference between telling the Tribunal what he knew from his own knowledge and what he did not know or could not recollect when he gave his evidence.
7. I am quite satisfied that Mr Peter Searle's evidence was truthful.
8. In giving his evidence he also had real recollection in his memory of the detail.
9. For these reasons, where there was a conflict about what happened in the past, I have preferred his evidence over that of the witnesses called for the OC.
10. I also accept the applicants' submission that the evidence given by Mr Peter Searle in his witness statement of 28 August 2024 was uncontested and uncontradicted in any material way by the evidence of Jo Higgins, Paul Crichton or Jeremy Brown-Greaves. Their evidence tends to corroborate his evidence, but where it conflicts, I prefer the evidence of Mr Peter Searle.
11. Mr Peter Searle's evidence, about when his company took over its management role in 2014 was not seriously disputed. Portsea Village Resort was in bad shape. There were all sorts of maintenance and repair issues that required substantial work.
12. These are also evidenced in the OC's 'Minutes of Building sub-committee' and of 'Site Meetings' in 2014 and 2015 which are referred to in the applicants' closing submissions.[37] I find them to be a reliable business record of high evidentiary value as at this time there was no legal dispute.
13. In the early period of June and August 2014, issues requiring works included:
    • the hot water service, which had not been serviced for many years and was 'considered DANGEROUS',
    • the previous manager had 'left the kitchen/corridor to the kitchen area in a "filthy" state' requiring professional cleaning, with most fridges not being operational and used for storage of junk, and the exhaust fan being 'minimally functional as solid with fat', and 'a lot of equipment not maintained and the oven ... left constantly on low as needed fixing';
    • 'no heating in the kitchen/dining/lounge/reception' and being 'beyond repair';
    • 'gas ducting heater unit to heat the indoor pool area ... not been operational for may years' being the probable cause 'why it's so damp in there';
    • windows not being professionally cleaned for some time;
    • broken back gate; and
    • 'Flaking window sills, rust etc'.
14. On 2 August 2014, Gaye Walton (the OC committee Secretary and member of the Building sub-committee) reported on her and Doug Cox's site meeting with Peter Searle, and his wife Corrie on 29 July 2014:

Doug, Janet, Corrie, Peter and myself had our first site visit since the change of management on July 29th 2014 and I'm reporting back to you all regarding this.

It's all starting to take an amazing transformation with the new management.

Dinner on Friday and Saturday nights is now available.

We can honestly state that "Grange" left the kitchen/corridor to kitchen area in a "filthy" state which has required us to have the kitchen professionally cleaned most of the fridges were not operational and used for the storage of junk the exhaust fan was minimally functional as solid with fat. There was a lot of equipment not maintained and the oven was left constantly on low as needed fixing. It has now been upgraded to a functional standard with management.

There has been no heating in the kitchen/dining/lounge/reception for what appears to be some time as the current system is beyond repair. We have also discovered that the gas ducting heater unit to heat the indoor pool area has not been operational for many years and that is probable (sic) why it's so damp in there. Investigating option of replacing gas heater and/or improving air flow into the pool area

1. On 26 October 2014, Gaye Walton reported on the site meeting on 26 August 2014 attended by others on how a 'Pandora's box' of problems had been uncovered: (my emphasis)

Doug, Stuart, Corrie, Peter and myself had another very informative and productive site meeting last week. Also Luke and Chris from Higgins attended re painting issues and review.

There has been further amazing transformations to PVR since my last newsletter.

Unfortunately the scope of the work has increased greatly after the neglect of the property which we have discovered on close inspection after grange have departed.

Doug and I are amazed at the commitment and attention to detail that Peter and Corrie have exhibited and we are sure that they had no idea of how "bad" a state the property was in and it has been like opening a "Pandora's Box" to say the least.

PVR was left in a shocking state, the problems being with inadequate heating, terrible hot water, poor Foxtel, inadequate WiFi, electrical hazards...and more. We have attempted to address these issues and now feel we have control of the site to advance forward. Unbelievable progress has been made in such a short time, unfortunately there was no interest by the Grange Group to keep the property up to a safe and acceptable standard with serious safety issues. This was never communicated to us previously despite our visits and nothing was ever mentioned re problems with equipment and if there was equipment issues and it was not functional they simply shut it down. Also we have had to spend Body Corporate money to upgrade the site however this expenditure was absolutely necessary for the further advancement of PVR to a profitable site.

Peter and Corrie have been given no previous data information due to Grange deleting and tell all that PVR was closed..... however they have had to give numerous "free" nights due to failings of either Grange or the individual apartment owners regarding heating/hot water/TV/Foxtel. Hopefully this will be resolved once upgrade happens. ...

We have now drawn "a line in the sand" so to speak and have full documentation and accountability for everything since the transfer of management which previously was "grey".

Every problem, issue, quote, purchases have been fully documented and verified. .....

1. That report also listed work on the indoor spa area, garden, locks, and emergency and general electrical work but importantly it made the observation that the Building sub-committee was now oversighting all the work being done by the OC's new manager, being Mornington Resorts Pty Ltd.
2. This had been authorised in the minutes of the 2014 SGM at which Mornington Resorts Pty Ltd had been appointed manager from 1 July 2014, stating: [38]

It was resolved that the Building sub-committee previously established by the committee be continued.

Building sub-committee comprising Gaye Walton and Doug Cox to continue to determine all building and manager's issues, and the manager is to report to the Building sub-committee.

Monthly site visits to continue, with the manager reporting to Gaye Walton and Doug Cox and all owners are invited to attend.

1. The reports continued in this vein from Gaye Walton and Doug Cox, who the evidence showed signed off on these communications to lot owners from the Building sub-committee.
2. The Building sub-committee experimented, before continuing, with having Mornington Resorts Pty Ltd's own staff do some of the work. For example, in the PVR Site Report for 2 February 2015, Doug Cox wrote:

GARDENING: Ceasing David at present and PVR doing the gardening as now have a mulcher, hedge trimmer and edger thus saving on removal of garden matter and general gardening costs.

We have more reliable maintenance staff and PVR will be doing the gardening on a trial basis at a reduced rate and saving on rubbish removal, mulch and so on. ....

1. At that time there was also an early reference to the security key card system maintained by the OC being replaced:

New encoder system has been purchased due to problems with people being locked out and the unreliability of the old system which was beyond repair.

1. In the next report there is a reference to the OC's security key card system being used for apartments which had their own individual card readers. Reporting in the Site Meeting Report for 17 March 2015, Gaye Walton wrote to lot owners:

GARDENING: New arrangements seem to be working well with many positive comments. ......

VINGUARD: Multiple problems with access thus a new reliable system has been installed with great success and hopefully no one will be locked out as has been happening frequently in the past few months. Apartment individual card readers are the owners responsibility if need replacing. All is now working from an OC perspective

1. In their Site Meeting Report for 12 June 2015, Gaye Walton and Doug Cox reported to lot owners in July 2015:

Installed and being painted. Looks fantastic also. Blinds need to be ordered (double and single) ......

It has now been nearly one year since Peter and Corrie were engaged as managers of PVR and what an amazing transformation has occurred over this period of time. The following is a snapshot of what has been achieved in 11 months:

ACHIEVMENTS: Some of the tasks completed since 1/7/2014

Renovation of the restaurant/dining/lounge area with glass folding doors. Full clean and functioning kitchen for restaurant. ....

Trifold doors x2 in large conference room due to rotting wood. .......

Gardening maintenance now being done in house without external contractor.

Old gym now functioning as a small meeting/conference room very successfully.

Beef and Burgundy Nights on the 4th Friday of the month. .......

Due to the scope of works undertaken it is extremely difficult to budget in arrears so the Budget will be calculated in advance from January to December after the AGM. The levies will remain constant until the AGM discussion on this. The AGM will be October/November at a date yet to be decided.

Thanks again for all the support over the past exciting 11 months with a huge improvement noted by all. This now a warm, friendly and great place to stay. Our list is getting smaller and smaller after each site meeting however this was a Pandora's Box and therefore we have done extremely well in such a short period.

1. In August 2015 a sewage issue arose after a 'recent incident' which led to the discovery that the plans were inaccurate. Reporting on the Site Report for 31 August 2015, Doug Cox and Gaye Walton wrote:

Problems with outside toilets plumbing with some clogged/blocked requiring clearance which is now totally cleared.

Annual sewerage clearance and check should be done to avoid disasters with blockages and back flow

1. Mr Peter Searle gave evidence to the Tribunal about this, and a drawing was produced to show where the sewage lines ran.
2. Following the site meeting on 19 October 2015 the Building sub-committee decided that more substantive engineering work might be required for structural issues that had emerged and Doug Cox and Gaye Walton wrote to lot owners:

It was decided to commission a Structural Engineer Report for PVR - Focusing on the structural issues with a comprehensive report to be submitted before at the AGM. .....

1. That led to ongoing works being done or organised by Mornington Resorts Pty Ltd at the direction of and under supervision by the Building sub-committee.
2. I accept Mr Peter Searle's evidence about that.
3. It was work of that nature - both as to the provision of services and the supply of materials under the MAA during the period in dispute under the OC's counterclaim - that was overseen by Gaye Walton as secretary and Mr Cox, as chair of the OC's Building sub-committee, who, when a bill from Mornington Resorts Pty Ltd or invoice from an third party supplier was submitted by Mornington Resorts Pty Ltd for payment by the OC, authorised the OC's external accountant, Mr Jeremy Brown-Greaves, to pay money out of the OC's bank account, which between them they controlled.
4. At the 2015 AGM the OC unanimously resolved to extend Mornington Resorts Pty Ltd's term as manager, under a new contract which came to be called the MAA. The previous agreement had been an adaption of the 1 December 1995 agreement with the old manager, Synergy Resort Management Pty Ltd that had been amended by a letter between the OC and Mornington Resorts Pty Ltd dated 25 June 2014.[39] The minutes of the 21 November 2015 AGM reflected that the new agreement would be agreed between Doug Cox for the OC and Mr Peter Searle for his company, recording: [40]

10. To extend the term of Mornington Resorts Pty Ltd as Owners Corporation Manager or appoint a new manager with effect from July 1st, 2016

Mornington Resorts was offered and accepted a 3-year term from 1st July, 2016 with a further 3-year option as the Owners Corporation Manager. Doug and Peter will prepare and sign a written agreement in detail which will be based on and update the current management agreement.

1. There are some other items of note from that 2015 AGM. Under:
   • Item 6 'Owners Corporation Manager Report' - Mr Peter Searle updated lot owners on work to date and the plans ahead:

Peter spoke at length regarding the works that have been undertaken at PVR over the past twelve months. He especially wanted to thank Corrie for her extremely hard work and effort in putting PVR back on the map as a wonderful holiday destination

The sauna stage 2 refit will be commencing on Monday 23, November and note that all other items listed from the last AGM have been attended to.

The objective is to finish off the capital works restoration of PVR. Peter also noted the high standard of security has been achieved and that the ongoing priorities were fire alarm system upgrade, brush fencing along Back Beach Rd and work on improving the hot water service efficiency thus reducing electricity costs.

Monthly site meetings and report have assisted owners in keeping up to date on the activities undertaken throughout the year.

A detailed email which was sent to Portsea Village Resort Owners prior to the AGM was tabled.

• Item 7 'To Approve the accounts for the Year /2014/2015:

Peter addressed the meeting on the capital expenditure totalling $372,756 itemised at page 10 of the Financial statements. Peter wanted to note in the minutes that Higgins were no longer involved in the painting maintenance at PVR and Drew would be undertaking this position at approximately half the cost. Also that ordering more remotes for back gate access.

• Item 8 - To approve the OC's budgets for 2015/2016 'financial year' and 2016 'calendar year':

The 2015/2016 Budget and 2016 calendar year budget were both tabled.

It was resolved that the 2015/2016 Budget and 2016 calendar year budget be approved.

The Maintenance Fund Item Budget was submitted and approved.

The fire alarm system quote will be broken down and reassessed by the sub-committee for approval once further investigation is completed.

• Item 9 the meeting set members' contributions - the fees to be 'levied' by the OC based on lot liability in the plan - for both the OC's Administration Fund and Maintenance Fund.

1. I will return to the MAA dated 16 January 2016 when I come to the counterclaim. It was an adaption of the old agreement with the original manager with much of the same language simply repeated.
2. While Mr Cox sought to distance himself from the MAA in his oral evidence to the Tribunal as not being a document he prepared personally, attributing authorship to Mr Peter Searle, the fact was that the contemporaneous email evidence between him and Mr Peter Searle showed clearly that its terms were negotiated between Mr Cox and Mr Searle in January 2016,[41] with Mr Cox wanting half a dozen changes.[42] One of the changes Mr Cox wanted added to the MAA was that in regard to cl 7.1 'Maintaining Common Property', that there be a new clause 7.1(a)(viii) that stated expressly:

(a) Subject to this Agreement, the Manager must at the Owners Corporation's expense:

(i) keep the Common Property properly maintained and in good repair ...

(viii) enter into and maintain service contracts for the regular maintenance and service of the lift and swimming pools.

1. Mr Cox had also seemingly forgotten his affidavit evidence filed in the County Court proceeding that he and Portsea Village Resort Pty Ltd had brought against Mornington Resorts Pty Ltd in which he had told the Court in said in July 2021:

2. I am a committee member (and former Chairman) of [the OC].

5. On or about 10 January 2016 I entered into a standard form [AMA] with the defendant. We did negotiate and change some clause of the Managing Agents Agreement.

1. The evidence of Jeremy Brown-Greaves, who I regard as an independent witness, supported the evidence given by Mr Peter Searle about how the OC's Building sub-committee approved expenses and quotes for services and materials and invoices for payment submitted to the OC during Mornington Resorts Pty Ltd's periods of management under the MAA and before that.
2. Mr Brown-Greaves had been engaged by the OC as an independent accountant and was paid a separate fee. He paid the bills out of the OC's bank account when Mr Cox had approved them and put together the other accounting documents for the OC that were then independently audited. As I shall come to, these accountancy and auditor expenses were all separately budgeted as items to come out of the OC's 'Administration Fund'.
3. His evidence did not contradict the evidence of Mr Peter Searle.

1. Byron Searle's evidence was substantially unchallenged and I accept it.
2. He gave evidence that Mornington Resort Pty Ltd's work, in managing and upgrading the resort, increased the goodwill and reputation of the resort.[43]
3. That evidence was also mirrored by his father, Mr Peter Searle, and by that of Mr Abell.

1. Michael Abell's evidence was substantially unchallenged and I accept it.
2. He was a long-standing lot owner who had seen all that had happened in the changes of management. Although he had chosen to stay with Mornington Resorts Pty Ltd as his apartment booking manager, he was an independent witness with little to gain from the litigation other than a small refund of fees that he had been compelled to pay to the new manager at the Portsea Village Resort after 1 July 2021.

1. I accept the applicants' submission that the evidence of Mr Doug Cox, the OC's committee chair and chair of its Building sub-committee during the material period in dispute, was selective and at times contradictory.
2. But I did not find Mr Cox to be deliberately evasive,[44] rather unable to answer or recollect. Although at times he did not answer questions directly, listening to and observing Mr Cox who, is an intelligent and mature individual with a fair but imperfect recollection of events, I found Mr Cox's evidence to be largely confirmatory of that of Mr Peter Searle.
3. However, unless corroborated by documents or other evidence which I have accepted, where there was any conflict in versions of events, I have preferred the evidence of Mr Peter Searle which I have found to be reliable testimony and based on his actual recollection.
4. Mr Cox asserted at various times in his evidence that he, personally, had relied on Mr Peter Searle during the events in question, when as the OC's committee chair and chair of its Building sub-committee, with Gaye Walton[45] its secretary, Mr Cox conducted site meetings with Mr Peter Searle reviewed and approved the quotes and invoices submitted by Mornington Resorts Pty Ltd for payment by the OC under the MAA.
5. I have no doubt that he did rely on Mr Peter Searle. There was no reason not to rely on the director of the OC manager and resort manager appointed by the OC under the MAA. Mr Cox had worked alongside him since Mornington Resorts Pty Ltd was first appointed. But what Mr Cox did not articulate to the Tribunal was how anything Mornington Resorts Pty Ltd or Mr Peter Searle did was, in any way, improper or even outside the scope of what was agreed by him or accepted by him for payment by the OC to Mornington Resorts Pty Ltd under the terms of the MAA.
6. Nor did Mr Cox identify anything Mr Peter Searle or his company did that was otherwise than in accordance with what he had agreed and approved on behalf of the OC at that time in question. His dispute with Mr Peter Searle came later, over the completion of the Terms of Settlement and the putting into place the new management arrangements that he and Mr Mirabito had arranged as the now secretary and new chair (respectively) of the OC committee during 2021.
7. As I shall return to, under the contractual provisions of the MAA, in addition to being entitled to be paid an annual fee for the 'Services' it was to provide, Mornington Resorts Pty Ltd was entitled to be paid fees for its services and reimbursed costs in maintaining the common property under cl 7.1(a) of the MAA, which provided that this was to be 'at the owners corporation's expense'.
8. The evidence that Mr Cox and the external accountant engaged by the OC, Mr Brown-Greaves both gave to the Tribunal was that where they had a doubt or questioned the characterisation of an invoice submitted for an item of service for repair or a capital work or other expense or cost that Mornington Resorts Pty Ltd sought payment or reimbursement for from the OC under cl 7.1(a) of the MAA, it was always open for them to seek additional information or to refuse to pay it if they disagreed. The evidence was, in fact, that this sometimes happened and Mr Cox and Mr Brown-Greave accepted that was so. If a query was raised, it was discussed, information might be requested, before the issue was resolved and the claimed amount, if approved, was authorised by him to be paid by the OC. Mr Brown-Greaves then made the payment from the OC's bank account.
9. Between Mr Cox and Mr Brown-Greaves, those two men had control over the management of OC's funds and its bank account and paid the accounts and invoices that Mr Peter Searle submitted for payment or reimbursement by the OC to Mornington Resorts Pty Ltd.
10. Although the OC did not discover its various records of its Building committee's 'PVR Site meetings', Mr Cox did not dispute that they occurred. Nor did he resile from or state as being in anyway inaccurate, the written reports that he and Gaye Walton gave of the site meetings held during the period of the counterclaim. There were many, but the ones of significant relevance to show the nature and extent of the vast amount of work that Mornington Resorts Pty had been asked to do by the Building sub-committee, and had done to its complete satisfaction, included those on 22 March, 24 May, 9 August 2016; 14 February, 19 June, 25 September 2017; 5 March, 28 April, 20 July, 18 September 2018; 11 February, 27 August 2019; and 30 May 2020. [46]
11. All that work was performed by Mornington Resorts Pty Ltd under the MAA. As with all the other invoices submitted by Mornington Resorts Pty Ltd, where there was a query by him or the accountant, it was discussed before he, Mr Cox, authorised the payment to be made by the accountant from the OC's funds that were held in the bank account that on behalf of the OC and its committee they controlled. Unlike many OC managers, as manager for the OC of Portsea Village Resort under the MAA, Mornington Resorts Pty Ltd did not handle the OC's money or bank accounts. The OC had engaged and was paying for the services of an independent accountant to do that who worked alongside the OC committee chair, Mr Cox.
12. And finally, nor did Mr Cox in any way dispute that, as he had recorded in his reporting to lot owners during that period, 'The role of the Building Subcommittee ... is to approve all expenditure (quotes and invoices) incurred by the OC prior to payment by our Accountant Jeremy from the OC Bank account'.

1. I found Mr Mirabito to be a most unreliable witness, and regrettably, untruthful in his evidence in some of the things he said to the Tribunal and to lot owner members of the OC at the time.
2. He held many opinions, which he might have believed, but his evidence to the Tribunal was largely a narrative of the story that he would like the Tribunal to find true rather than factual evidence on which the Tribunal can make factual findings.
3. Throughout his sworn evidence, Mr Mirabito was prone to making things up to suit his version of what he wanted to have taken place. He professed recollection when he did not have any recollection. He professed knowledge when he did not have any direct knowledge. On one occasion, in relation to his knowledge at the time - when Mr Peter Searle and Byron Searle and an employee of Mornington Resorts Pty Ltd attended the Portsea Village Resort in October 2021 to make arrangements for incoming guests of the lot owners and to place a portable cot in an apartment for an incoming guest - Mr Mirabito misled the Tribunal in his initial account about what he was doing and who he was speaking to at that time.
4. What might have the occurred on that single occasion is largely irrelevant to the substantive issues in dispute that this Tribunal must decide. However, Mr Mirabito's evidence to the Tribunal about it demonstrated that even under oath Mr Mirabito found it hard to stick to the facts he actually knew to be true, and that he preferred to narrate and make up a story to suit him.
5. I accept the applicants' submission that the evidence of Mr Mirabito was contrary, evasive and unreliable. I accept that none of it should be accepted unless objectively corroborated.
6. As I shall explain, Mr Mirabito had a very personal and emotionally charged grudge against Mr Peter Searle, as if it was a personal competition that he had to win against the former barrister.
7. It emerged from the documents discovered and introduced into evidence in these legal proceedings in the Tribunal, that Mr Mirabito had told lot owners that he was happy to cover the costs of an unsuccessful County Court proceeding the new joint venture company, Portsea Village Resort Pty Ltd and Doug Cox (as plaintiffs) had brought against Mornington Resorts Pty Ltd (as defendant). That legal action had been withdrawn against Mornington Resorts Pty Ltd in September 2021. Mr Mirabito told lot owner members who had followed him to join the new 'Rental JV' for which Portsea Village Resort Pty Ltd acted as their trustee, that a claim for costs was 'expected' because of the withdrawal of that County Court proceeding, and that 'it will be my great pleasure to personally undertake the responsibility for the process and any costs awarded'.[47] That behind the scenes statement showed an intensely personal relish Mr Mirabito took in the disputation with Mornington Resorts Pty Ltd and Mr Peter Searle. It also showed he had a personal financial interest at stake that went beyond that of the general lot owners or that of his lot owning company or as their appointed Chairman of the OC committee.
8. While there was clearly rivalry between both men, Mr Mirabito's evidence to the Tribunal was of a man with a very personal grudge against Mr Peter Searle and an axe to grind and wield where he could, which eroded any semblance of rational objectivity he might possibly have had otherwise.
9. Mr Mirabito was also far from objective at an inherently human level. While I do have empathy for him having lost his father, for whom he stressed to me he bought his apartment, his personal grief was tied up in his later actions at Portsea Village Resort and affected the reliability of all his evidence. He came across as a man who had subjectively convinced himself that he could save the other lot owners (some elderly) from Mr Peter Searle, and took it upon himself to assert many quite irrelevant and scurrilous assertions about Mr Peter Searle, including about his professional career and standing as a former barrister, sometimes with a grin on his face.
10. While Mr Mirabito was well-spoken and direct and deliberate, calling a spade a spade (at least from his standpoint), for him giving evidence on oath was far from his strength. He approached his testimony as if it was advocacy or a political debate. Often in his evidence, like a showman, he would turn to see the reaction of others present in the hearing room when he thought he had scored a point.
11. I accept there were some things that Mr Mirabito said were factually true (rather than an opinion). In telling the Tribunal how successful he had been in his dozens of petrol station developments under the many different companies he had set up, he said he was concerned with big picture outcomes and results and sometimes left the finer details - like incorporating companies - to others. But that did not stop him having a fixed opinion and expressing his views in his evidence about what he wanted the Tribunal to find about those finer details.
12. While both Mr Peter Searle and Mr Mirabito are each, somewhat, forces to be reckoned with in their individual and strong personalities - and it was obvious from the way they spoke and the tone in which they spoke about each other that between the two successful men having had different careers there was also a rivalry between old and new school ideas and careers - I accept and prefer the evidence of Mr Peter Searle over that of Mr Mirabito on all points of conflict between them.
13. I also reject Mr Mirabito's after the event evidence that sought to characterise past payments made by the OC based on his own review of the OC's records and invoices that the OC had paid, and his personal interpretation of the MAA. Mr Mirabito is not and was not called as an expert forensic accountant and his opinion evidence on this topic was of no assistance to the Tribunal. Apart from being irrelevant and strictly hearsay, it did not contradict the accuracy of the contemporaneous minutes of the Building sub-committee or in any way undermine the direct evidence given by other witnesses with actual knowledge of historical events before his private company became a lot owner in 2020. While Mr Mirabito might have some knowledge of companies and how they sometimes operate, I also place little weight in the cogency or coherence of his understanding of the proper operation of owners corporations in this State.

EVENTS FOLLOWING THE TERMS OF SETTLEMENT ON 14 MAY 2021

1. The events leading up to this acrimonious legal dispute brought to the Tribunal for resolution, which affects all owners of the 31 lots in the land subdivision affected by the OC, had been preceded by a complicated history, which might have ended on 1 July 2021 when the MAA came to an end under the Terms of Settlement agreed between the OC and Mornington Resorts Pty Ltd in May 2021.

1. The Terms of Settlement resulted from a mediation between the OC and Mornington Resorts Pty Ltd.
2. Before the mediation was held, disputes had been raised by Mr Mirabito as the incoming OC committee Chairman appointed at a committee meeting on 23 November 2020, following his company's purchase of a lot earlier that year, in January 2020. Those allegations had been broad and unspecific and alleged Mornington Resorts Pty Ltd had a conflict of interest and had breached its duty and obligations under the MAA, and challenged many invoices that had previously been approved for payment by the OC.[48] It had led to legal letters and responses about the effect of the MAA and the distinct roles that Mornington Resorts Pty Ltd was required to perform under that single contract with the OC.
3. According to the Brief to Mediator (prepared by the OC's then solicitors) Alison Kitchen, John Skepper, Denise Clancy, Allan Kalus, Stewart McAuley and John Mirabito (chair) and Doug Cox (secretary) comprised the OC committee.
4. Following the mediation and drawing up of the contractual Terms of Settlement, the affixing of the OC's common seal to that agreement was witnessed by Mr Mirabito in his capacity as 'OC Chairman' and Mr Cox as 'OC Secretary', and it was signed by Mornington Resorts Pty Ltd by its director and secretary Mr Searle.
5. Under the Terms of Settlement the contracting parties reached a negotiated outcome to settle their differences, and to terminate the MAA early. Under its operative clauses relevant to this dispute:

(a) Mornington Resorts Pty Ltd agreed with the OC to cease as manager under the MAA, which would 'come to an end on 30 June 2021' (cl 3);

(b) Until 30 June 2021 the OC required Mornington Resorts Pty Ltd to 'continue to provide services in accordance with the MAA and assist with the handover to a new manager to be appointed by the OC' on 1 July 2021 (cl 4 and 6), and to perform other obligations (cl 7 and 8);

(c) In consideration for Mornington Resorts Pty Ltd's 'agreement' that the MAA would come to an end on 30 June 2021 and to perform the obligations under cl 7, the OC agreed to pay it $76,250 (cl 5);

(d) The OC separately agreed to continue to pay for Mornington Resorts Pty Ltd's services and materials supplied under the MAA 'up to and including 30 June 2021' (cl 6);

(e) At a contemplated completion on 1 July 2021, all payments to Mornington Resorts Pty Ltd under the MAA would cease and the OC's books and records would be handed over by Mornington Resorts Pty Ltd and it was required to 'remove all property belonging to' it and sign documents necessary to transfer the liquor licence attached to the premises to a company nominated by the OC, with all 'services and other agreements' to be later transferred by it into the OC's name by 28 July 2021 (cl7); and

(f) The parties gave each other mutual releases (cl 9).

1. The Terms of Settlement are not long, and it is convenient to set them out in full, as to properly construe them the contract must be read as a whole and in context. With its introductory descriptions, parties, recitals and clauses, the contract provides:

AND IN THE MATTER OF A MANAGING AGENT AGREEMENT DATED 16 JANUARY 2016

1. Owners Corporation PS302397L (OC) is the Owners Corporation for Portsea Village Resort at 3765-3789 Point Nepean Road, Portsea. It consists of 31 apartments together with the common property shown on plan of subdivision no PS302397L (Premises).
2. By a Managing Agent Agreement dated 16 January 2016 (MAA) MR was appointed manager. Pursuant to the MAA, the OC engaged MR for an initial term of 3 years and 6 months commencing 16 January 2016. The MAA was subsequently renewed in accordance with clause 5 for a further term of 3 years commencing 1 July 2019.

1. Disputes and differences have arisen between the OC and MR in relation to the MAA. The OC claims:

(a) MR terminated the MAA effective 30 June 2021; and

(b) MR has breached its obligations set out in the MAA.

1. On 9 March 2021, the OC served a Notice of Dispute on MR in accordance with clause 16.2(a) of the MAA regarding the termination of the MAA.
2. On 20 April 2021, the OC served a Default Notice in accordance with clause 12 of the MAA setting out a number of breaches of the MAA alleged by the OC.
3. MR denies:

(a) it has terminated the MAA; and

(b) it has breached the MAA.

1. To avoid the time and expense of litigation, the OC and MR have agreed to settle the disputes between them on the terms set out in these Terms of Settlement.

1. These terms are subject to approval by members of the OC by ordinary resolution.
2. The OC shall convene an Extraordinary General Meeting of the OC within 28 days to ratify the Terms of Settlement and authorise payment of the Settlement Sum.
3. The MAA will come to an end on 30 June 2021.
4. Until then, MR must continue to provide the services in accordance with the MAA and assist with the handover to a new manager to be appointed by the OC.
5. In consideration for MR's agreements in clauses 3 and 7 and subject to those clauses, the OC will pay MR and MR agrees to accept the sum of seventy-six thousand two hundred and fifty dollars ($76,250.00) on 1 July 2021 (Settlement Sum).
6. MR is entitled to the balance of remuneration and other payments (if any) owed to it under the MAA up to and including 30 June 2021.
7. On 1 July 2021:

(a) all payments to MR under the MAA will cease;

(b) except to the extent already delivered under paragraph 7(c), all files, written agreements and other records of the OC are to be delivered by MR to the OC or its replacement manager;

(c) the Common Areas will be vacated by MR and MR shall remove all property belonging to MR and leave all property belonging to the OC in place including all files, written agreements and other records of the OC; and

(d) MR will sign all documents required and do all things necessary to procure the transfer of the Liquor Licence in the name of Rawson Dell Pty Ltd attaching to the Premises to a company nominated by the OC.

1. All services and other agreements pertaining to the Premises are to be transferred by MR into the OC's name by 28 July 2021.
2. Subject to these terms, the parties release and forever discharge one another from all actions, claims, demands, costs, expenses, damages, proceedings, and all loss and liability arising out of or in connection with any matter in dispute referred to in the Recitals.

1. By cl 1 and 2, the Terms of Settlement required ratification by the OC before they became operable as a contract.
2. On 9 June 2021 an EGM of the members of the OC was conducted to pass the following motion: [49]

To ratify the Terms of Settlement between the Owners Corporation and Mornington Resorts Pty Ltd dated 14th May 2021.

1. The minutes of meeting prepared by the OC record that the motion was passed unanimously by members present in person or by proxy. I accept that as a fact.
2. According to the minutes of that EGM, what also appears to have occurred prior to the EGM, was that there some discussion about what would take place from 1 July 2021.
3. In the lead up to the EGM, the minutes record as follows ('PVR' standing for 'Portsea Village Resort'; 'the Committee' being the committee of the OC and 'MR' being Mornington Resorts Pty Ltd): (my emphasis)

John Mirabito summarized the way the Committee envisaged PVR would operate from 1/7/21 as covered in his email to all owners prior to the meeting. In summary:

The Restaurant would continue and run by Simon Higgs under a licence arrangement with the OC. Details of minimum opening hours etc. will need to worked through.

Renting of Conference Facilities would be managed by the OC Committee.

A fixed price Maintenance Contract will be set up to maintain the common property and gardens. This will include minor items (e.g. changing light bulbs) for all apartment owners.

A separate contract will set up for cleaning of all common areas.

There was some discussion around options for apartment rental from 1/7/21 when the existing Apartment Management Agreements that individual owners have with MR will become frustrated and therefore no longer valid.

The Committee has investigated other options, for example with RT Edgar, and also an in house option whereby the renters set up a Co-Op to run and control the rental business. The OC owns the office computer, including the Room Master booking software. It is envisaged that the key reception staff would be maintained which would allow a smooth transition.

After some discussion, there was unanimous support from the owners for the Co-Op model to be developed as the preferred model for apartment rental from 1/7/21.

There was also general agreement that the name "Portsea Village Resort" be changed to for example "Portsea Apartments".

The Owners also agreed that the Committee move forward to implement the plan as outlined above to ensure we have a smooth transition on 1/7/21.

1. I accept that as an accurate statement of what was in fact discussed on 9 June 2021 before the EGM. I also accept that there was at least a level of consensus (there being no resolution passed) for what was recorded in that summary as having 'support from the owners' regarding a 'Co-op model ... for apartment rental'.

1. The next fortnight, the OC committee held a meeting on 21 June 2021.
2. The OC committee at the time still consisted of Alison Kitchen, John Skepper, Denise Clancy, Allan Kalus, Stewart McAuley and John Mirabito (appointed as chair) and Doug Cox (appointed as secretary).
3. The minutes of that 21 June 2026 OC committee meeting record what was discussed by the committee, under the heading 'General Business' (my underlining):

The Committee discussed the result of the meeting held on June 9, 2021 prior to the EGM at which the Members unanimous [sic] agreed:

(1) To establish of a joint venture (Rental JV) to operate the short-term rental of the JV members property;

(2) Enter into a non-exclusive Licence Agreement with the Rental JV for the office, reception area, waiting area, laundries, store rooms and all other areas required to operate the Rental JV business.

(3) To grant the Rental JV sole and exclusive use of all plant and equipment on the Property owned or supplied by the OC which the Rental JV requires to operate the Rental JV business for the duration of the Licence on condition that the Rental JV maintains, at its own cost, the plant and equipment in good repair and working order and returns it to the OC at the end of the Licence in good repair and working order and condition.

(4) Introduce an Induction Fee to recover the cost of services provided by the Rental JV to 3rd party rental agencies that manage the property of Non-Members of the Rental JV;

(5) The Conference Facilities are to be managed by the OC Committee with a fee to be charged for its use;

(6) Enter into a fixed price Maintenance Contract to maintain the common property and gardens;

(7) Enter into a fixed price cleaning contract for the cleaning of the common areas; and

(8) Enter into a non-exclusive Licence Agreement with Simon Higgs for the restaurant, kitchen and outdoor dining areas.

(9) To grant restaurant licence holder sole and exclusive use of all plant and equipment on the property owned or supplied by the OC which the restaurant requires to operate the restaurant business for the duration of the Licence on condition that the restaurant licence holder maintains, at its own cost, the plant and equipment in good repair and working order and returns it to the OC at the end of the Licence in good repair and working order and condition.

(10) To limit and restrict all lot owners' access to areas of the Common Property that are locked so as to ensure safety and to prevent loss and damage without the prior express permission of the committee.

A MOTION WAS UNANIMOUSLY PASSED to establish of a Joint Venture (Rental JV) to manage the short-term rental of Members apartments who wish to join.

A MOTION WAS UNANIMOUSLY PASSED that the Committee negotiate a Licence Agreement with the Rental JV and that once agreed, the Licence Agreement to put to the Members for a Special Resolution as required pursuant to the Owners Corporation Act 2006.

A MOTION WAS UNANIMOUSLY PASSED grant the Rental JV sole and exclusive use of all plant and equipment on the Property owned or supplied by the OC which the Rental JV requires to operate the Rental JV Business for the duration of the Licence on condition that the Rental JV maintains, at its own cost, plant and equipment in good repair and working order and returns it to the OC at the end of the Licence in good repair and working order and condition.

A MOTION WAS UNANIMOUSLY PASSED to allow the Rental JV to charge an Induction Fee of $100.00 plus GST to recover the cost of services to be provided by the Rental JV.

A MOTION WAS UNANIMOUSLY PASSED that the Conference Facilities be managed by the Owners Corporation and that a fee of $30.00 (plus GST if applicable) per person be charged for the use of the Conference Facilities.

1. As is apparent from this minute, the OC committee members interpreted the discussion before the EGM of a 'Co-Op' model set up by the renters as authorising them to establish what their minute of meeting called a 'joint venture' - or 'Rental JV' - which would 'operate the short-term rental of the JV members [sic] property' who wished to join and also to 'Introduce an Induction Fee to recover the cost of services provided by the Rental JV to 3rd party rental agencies that manage the property of Non-Members of the Rental JV' and to 'limit and restrict all lot owners' access to areas of the Common Property that are locked' unless the Committee itself expressly authorised it.
2. In the workweek before that OC committee meeting, Mr Mirabito had been getting things ready and on 16 June 2021, using his usual people who had established companies for him in his petrol station property development businesses, he had authorised a new company to be incorporated through ASIC, called Portsea Village Resort Pty Ltd ACN 651 068 905.[50]
3. Mr Mirabito also prepared an email to lot owner members on 16 June 2021 to state delight in 'inviting' members to join the new Rental JV advising that, structured with a company as its trustee, 'the shares in the company are held by the OC'.[51]
4. The ASIC records tendered into evidence establish that Portsea Village Resort Pty Ltd was in fact incorporated on 22 June 2021 with the OC as its original shareholder (but was replaced by Mr Mirabito as the sole shareholder shortly before 1 July 2021). On 22 June 2021 a trust called the 'THE PORTSEA VILLAGE RESORT TRUST' was apparently also established with that company as trustee.[52]

Establishment of trustee company and Unit Holders Agreement

1. Following the OC committee meeting, and in time for the hand-over under the Terms of Settlement on 1 July 2021, another document was prepared for lot owners joining the so-called 'Rental JV' or 'rental Co-op'.
2. Azzure-Pier Street Pty Ltd (Mr Mirabito's private trust company owning his lot) and Mr Cox as owner of his lot at Portsea Village Resort, having apparently subscribed as 'initial unit holders' of units in the unit trust of which the company Portsea Village Resort Pty Ltd was trustee, then entered into Unitholders Agreement with it in the following capacities:[53]

PORTSEA VILLAGE RESORT PTY LTD ACN 651 068 905 in its own capacity and as trustee for THE PORTSEA VILLAGE RESORT TRUST ABN 19 883 274 606 of Suite 12, 13 Church Street, Hawthorn Victoria 3122 (Trustee)

JOHN MIRABITO of 11 Redfield Court, Wheelers Hills, Victoria 3150 (Initial Shareholder)

1. The Unitholders Agreement was executed by:
   • Portsea Village Resort Pty Ltd in its own capacity and as trustee for 'The Portsea Village Resort Trust' by its director Mr Mirabito and secretary Mr Cox,
   • Mr Mirabito personally as 'initial shareholder',[54] and
   • each of the 'initial unitholders' as follows:
     • Azzure-Pier Street Pty Ltd ACN 109 818 386 as trustee for The Azzure Pier Street Unit Trust ABN 49 294 319 091 (signed by its director Mr Mirabito and secretary Mr Cox); and
     • Douglas Bruce Cox (signing personally).
2. The Unitholders Agreement commences with the following recitals: (my emphasis)

1. The Trustee is the trustee of the Unit Trust.
2. The Trustee, in its capacity as the trustee of the Unit Trust, intends to own and carry on the Business on behalf of the Unit Trust.

1. As at the date of this Agreement, the Initial Shareholder is the legal and beneficial owner of all of the Shares in the Trustee.

1. The parties have agreed to enter into this Agreement to record how the Business and the affairs of the Unit Trust will be conducted and regulated.
2. The Initial Shareholder has agreed to enter into certain commitments in respect of the Shares in the Trustee as set out in this Agreement.

1. By cl 21.11 the parties acknowledge that those recitals are 'true and correct and form part of this Agreement'.
2. Its other relevant operative clauses provide: (my emphasis)

This Agreement commences on the Commencement Date, and will continue in full force and effect as between the Trustee, and the parties to this Agreement from time to time until:

(a) terminated by the mutual agreement of all parties (from time to time) in writing; or

(b) in respect of a particular Unitholder or Shareholder, it has Disposed of the last of its Units or Shares (as the case may be).

(a) This Agreement is to be read in conjunction with the Trust Deed and the Constitution.

(b) If there is an inconsistency or conflict between the provisions of this Trust Deed, this Agreement and the Constitution, they will prevail in the following order:

(i) this Agreement;

(ii) the Trust Deed; and

(iii) the Constitution.

The Unitholders hereby irrevocably authorise the Trustee to issue to each Eligible Subscriber, 1 new Unit in the Unit Trust for each Apartment owned by the Eligible Subscriber (New Unit), subject to such Eligible Subscriber:

(a) paying the Subscription Price (in full, without deduction of set-off) to the Trustee in immediately available funds; and

(b) delivering to the Trustee a Deed of Adherence that has been duly executed by the Eligible Subscriber.

The object of the Trustee is to carry on the Business for the benefit of the Unitholders.

(a) cooperate and use its best endeavours to enable the Trustee to successfully carry on the Business;

(b) at all times comply with all of their obligations under the Rental Management Agreement between that Unitholder and the Trustee;

(c) at all times comply with all of their obligations under this Agreement;

(d) make decisions that are required of it in good faith and in the best interests of the Trustee and the carrying on of the Business as a commercial venture;

(e) use its best endeavours to foster the development of the Business and promote the best interests of the Trustee;

(f) immediately, on receipt of any revenue relating to the Business or any Rental Management Agreement or otherwise, pay those funds into the Trustee's bank account; and

(g) be fully transparent with each other in respect of matters relating to the Business.

By executing this Agreement or a Deed of Adherence, each Unitholder acknowledges and agrees that:

(a) the Rental Management Terms will constitute a separate and binding contract between each Unitholder and the Trustee in respect of the rental of their Apartment (each a Rental Management Agreement); and

(b) they are bound by (and must comply with) the Rental Management Terms.

Each Rental Management Agreement between the Trustee and a Unitholder commences on the date that the relevant Unitholder is issued Units in the Unit Trust, and continues until that the date that the Unitholder Disposes of their Units in accordance with the provisions of this Agreement.

For the avoidance of doubt the parties acknowledge and agree that in the conduct of the Business any goods or services acquired by the Trustee are acquired as agent for the Unitholder who benefits from that acquisition.

(a) The parties acknowledge that, as at the date of this Agreement, the Board comprises of the Initial Directors who have been appointed by or on behalf of the Initial Unitholders.

(b) Additional or replacement Directors may only be appointed to the Board by a Special Resolution of Unitholders, provided that any such additional or replacement Director must satisfy the relevant Eligibility Condition.

(a) The parties acknowledge and agree that that the Shares in the Trustee are to be held by the chairman of the Board of the Trustee from time to time.

The Board will manage the Trustee and the Business and will deal with all funds and assets of the Trustee and the Business in accordance with the provisions of this Agreement, and in particular, will:

(a) subject to any matters which are specifically reserved for the approval of Unitholders as set out in clause 7.5, the Board will have absolute discretion in respect of the day-to-day conduct of the Trustee and the operations of the Unit Trust and the Business in accordance with this Agreement;

(b) manage and administer any responsibilities or obligations of the Trustee or the Unit Trust pursuant to each Rental Management Agreement ...

Notwithstanding any provision of the Trust Deed or the Constitution, the Unitholders acknowledge and agree that the Trustee will rebate all profits (after tax, depreciation, repayment of any Unitholder Loans and all costs and expenses) generated from the Service Fees received by the Business to each Unitholder in proportion to the percentage of the Income generated from the rental of that Unitholder's Apartment.

A Unitholder may serve a notice in writing (Default Notice) at any time if:

(a) a Unitholder Disposes of (or attempts to Dispose of) its Units other than as permitted by this Agreement;

(b) a Shareholder Disposes of (or attempts to Dispose of) the Shares other than as permitted by this Agreement;

(c) subject to clause 13.5, Control (by any means) of a Unitholder or Shareholder (or in the case of a Unitholder or Shareholder entering into this Agreement as the trustee of a trust, a change in Control of that trust) is vested in a person who does not, or persons who do not together, have such Control as at the date of the execution of this Agreement;

(d) a Unitholder or the Unitholder's Principal undergoes or suffers an Insolvency Event;

(e) a Unitholder commits a material breach of their obligations under their Rental Management Agreement, including (but not limited to) a breach of the Unitholder's obligations under clauses D1 or D2 of the Rental Management Terms;

(f) the Rental Management Agreement between a Unitholder and the Trustee is terminated for any reason; or

(g) without limiting any of the foregoing, there is a material breach of this Agreement by a Unitholder,

Unless all Unitholders otherwise agree in writing, a Unitholder must not Dispose of its Units except as expressly permitted or required in accordance with the provisions of this Agreement.

If a Unitholder holds Shares, the Units and Shares shall be stapled for the purposes of this Agreement and any transfer or redemption of Units will automatically trigger a transfer or redemption of Shares.

If a Unitholder holds Shares and that Unitholder Disposes of its Units in accordance with this Agreement, then that Unitholder must either:

(a) if directed by the Board, also transfer to the transferee of the Units, for no additional consideration, all Shares held by the Unitholder in the Trustee; or

(b) transfer, assign or otherwise deal with the Shares in the Trustee as directed by the Board, which may include a redemption of those Shares.

1. Annexure A of the Unitholders Agreement contains definitions, the following being relevant: (my emphasis)

Apartment means an apartment in the Portsea Village Resort being a Lot in Strata Plan PS302397L.

Business means the business of managing the rental of the Apartments as agent for the Owners in accordance with the Rental Management Terms.

Deed of Adherence means a Deed of Adherence pursuant to which an Eligible Subscriber agrees to be bound by the terms of this Agreement and the Rental Management Terms in substantially the same form as a the document attached to the Agreement at Annexure C.

(a) in respect of a Unitholder, the conditions required in order to become a Unitholder being that the Unitholder:

(i) is the Owner of an Apartment; and

(ii) has executed a binding Deed of Adherence; and

(b) in respect of a Director, the requirement that such Director:

(i) must be an Associate or Principal of a Unitholder which (at all times during the Director's term of office) satisfies the requirements of clause (a) of this definition, or is otherwise approved by a Special Resolution of Unitholders; and

(ii) must not be a member of the committee of the Owners Corporation.

Income means all Rental Proceeds received by the Trust from the Business.

Initial Directors means Douglas Bruce Cox and John Mirabito.

Initial Shareholder means the Shareholder described in Schedule 2.

Initial Unitholders means the holders of Units as at the date of this Agreement, being each of the parties listed in Schedule 1.

Lot means any Lot on Strata Plan No. PS302397L, being the Plan of Subdivision which comprises the Portsea Village Resort, other than any common property identified on that plan.

Owner means the registered proprietor/s of any Apartment from time to time.

Owners Corporation means Owners Corporation 302397L.

Portsea Village Resort means the property known as the "Portsea Village Resort" located at 3765 Point Nepean Road, Portsea, Victoria 3943.

Rental Management Agreement has the meaning given in clause 5.1(a).

Rental Management Terms means the terms of each Rental Management Agreement between the Trustee and an Owner documenting their respective rights and obligations in respect of the holiday rental of the Owner's Apartment, as set out in Annexure B, or otherwise as agreed by the Trustee and the relevant Unitholder in writing.

Subscription Price means the price to be paid for a Unit in the Trust being $500 excluding GST (if any), or such other amount as determined from time to time by the Board.

Trust Deed means the trust deed establishing the Portsea Village Resort Unit Trust dated 22nd day of June 2021, between the Trustee and the Initial Unitholders.

Unit means a unit in the Unit Trust having the characteristics provided in the Trust Deed.

Unitholder means a holder of a Unit (from time to time) and includes persons jointly registered.

Unit Trust means the unit trust known as The Portsea Village Resort Trust created by the Trust Deed.

1. Annexure B of the Unitholders Agreement contains 'Rental Management Terms' which I set out in Appendix B to these reasons. They form the basis on which each lot owner must contract with Portsea Village Resort Pty Ltd as their booking manager and rental collection agent under cl 5.

1. The legal effect of these documents is that they give a lot owner of land in the subdivision affected by the OC the ability:
   • to elect to appoint Portsea Village Resort Pty Ltd (acting as trustee for a unit trust), as a private company with Mr Mirabito as its sole shareholder, to act as rental agent for those lot owners upon taking up a unit in the trust and paying the subscription price determined by its Board (being Mr Mirabito and Mr Cox), initially $500;
   • in so electing and appointing, they require the lot owner to enter a Rental Management Agreement ('RMA') with that private company containing the 'Rental Management Terms' in Annexure B, but which might be varied 'as otherwise agreed by the Trustee [i.e. Portsea Village Resort Pty Ltd] and the Unitholder [i.e. lot owner] in writing';
   • in so electing and appointing, they require the lot owner to permit Portsea Village Resort Pty Ltd (as the 'Manager') to conduct the 'business of managing the rental of the Apartments as agent for the Owners in accordance with the Rental Management Terms', including to exclusively market and select the guests to occupy their lots subject only to any 'specific rental terms' allowed for under an individual RMA - as 'Owner's Requirements' - which the Manager agrees 'to use their best endeavours to ensure that the rental of the Owner's apartment in accordance with [terms of the RMA] complies with the Owner's Requirements';
   • in so electing and appointing, they require all Rental Proceeds in respect of the Apartment belonging to a lot owner to be 'paid directly to the Manager to be held by the Manager and rebated to the Owner in accordance with and subject to the [terms of the RMA] and the terms of the Unitholders Agreement';
   • in so electing and appointing, the lot owner, as 'Owner' under the RMA, appoints the Manager (i.e. Portsea Village Resort Pty Ltd) as its exclusive agent for the purposes of providing the 'Services' (being the services set out in cl C of the RMA) in accordance with the RMA and agrees not to appoint anyone else as their agent in relation to the provision of those 'Services' or otherwise grant any other person any of the rights conferred upon the Manager as agent to provide those Services, which include:
     • managing and accepting bookings for the rental of the Apartment (i.e. the lot) on behalf of the lot owner,
     • receiving 'Rental Proceeds',
     • 'arranging cleaning' of the Apartment in the lot (including laundering of linen and towels made available for use by 'Occupiers'),
     • 'providing reception services' during defined hours, or
     • 'any other services provided by the Manager from time to time with respect to the rental of the Apartment';
   • in so electing and appointing, under the RMA, as 'Owner' the lot owner agrees with Portsea Village Resort Pty Ltd as 'Manager', inter alia, to:
     • 'bear all costs in respect of the ownership and occupation of the Apartment, including (but not limited to) all utilities, rates and services costs accrued or levied in respect of the Apartment' (unless otherwise specified in the RMA),
     • 'ensure that the Apartment is, at all times, in a state of good repair and otherwise in a condition that is suitable for occupation by Occupiers',
     • 'ensure that the Fixtures and Chattels are in good working order and are not damaged or in any way defective',
     • 'promptly respond to and address all reasonable requests from the Manager in respect of any required repairs or maintenance in respect of the Apartment, the Fixtures and the Chattels',
     • 'ensure that the state and condition of the Apartment, the Fixtures and the Chattels is compliant with all directions or instructions received from the Manager in respect of any relevant short-term accommodation or rental laws and regulations';
   • in so electing and appointing, under the RMA, as 'Owner' the lot owner agrees that they will:
     • 'not rent, licence or otherwise seek to derive any rental income from the leasing of the Apartment either on their own account or via any other rental services provider',
     • to 'procure that the Apartment is vacant and otherwise available for rental in accordance with [the RMA] for a minimum of three full calendar months during each financial year, unless otherwise agreed by the Manager in writing';
   • in so electing and appointing, notwithstanding the Trust Deed or the Constitution for the Trust, the lot owner agrees instead that:
     • the Trustee (i.e. Portsea Village Resort Pty Ltd) will rebate all profits (after tax, depreciation, repayment of any Unitholder Loans and all costs and expenses) generated from the Service Fees received by the Business conducted by Portsea Village Resort Pty Ltd to each lot owner as 'Unitholder' in proportion to the percentage of the Income generated from the rental of that Unitholder's Apartment,
     • the Trustee is to carry on the 'Business' for the benefit of the Unitholders, namely, only those lot owners who take up Units in the trust creating the joint venture between the lot owners who take part.
2. Some lot owners members of the OC elected not to engage Portsea Village Resort Pty Ltd to take bookings for their lots on these terms.

Byron and Ursula Searle and Michael Abell elected to use their own letting agent

1. Mr Peter Searle's two children, Byron and Ursula, are two who did not want to engage Portsea Village Pty Ltd as their agent for booking their apartments under these arrangements or accept the other legal obligations to it. A third is Mr Michael Abell.
2. That was their choice to make. Under the OC Act and Subdivision Act, lot owners are entitled to rely on their statutory rights under those Victorian laws that enable them to use and enjoy the property rights attached to their ownership of land under the plan of subdivision affected by an owners corporation and according to the statutory rules of the owners corporation voted for by the members of the owners corporation in accordance with those laws_._
3. Lot owners of land in a plan of subdivision affected by an owners corporation and their committee, and entities created by some of them or by their committee, cannot compel other lot owners to enter into a joint venture with them. They cannot compel other lot owners to engage and accept personal services from a third party service provider or to accept someone to act as agent for them personally. They cannot compel a lot owner to entrust the revenue derived from ownership of their lot to a third party.
4. It is not an understatement to say that Mr Mirabito as the OC committee Chairman and sole shareholder of this joint venture vehicle took considerable umbrage to Byron and Ursula and Michael exercising their lawful right to make that election and to continue to use Mornington Resorts Pty Ltd as their booking manager.
5. While Mr Mirabito's real gripe was with the outgoing resort and OC manager Mornington Resorts Pty Ltd and Mr Peter Searle, that did not stop the OC committee Chairman using all the powers available to him - including being in control of Portsea Village Resort Pty Ltd as director and sole shareholder - to make their rental use and enjoyment of their lot difficult if they continued to remain with their chosen appointed booking agent.
6. The seeds were already apparent in the OC committee minute of meeting on 21 June 2021 to 'Introduce an Induction Fee to recover the cost of services provided by the Rental JV to 3rd party rental agencies that manage the property of Non-Members of the Rental JV' and to 'limit and restrict all lot owners' access to areas of the Common Property that are locked' unless the Committee itself expressly authorised it. The groundwork has also been laid by Mr Mirabito telling lot owners before the 9 June 2021 EGM: ('MR' standing for Mornington Resorts Pty Ltd)

There was some discussion around options for apartment rental from 1/7/21 when the existing Apartment Management Agreements that individual owners have with MR will become frustrated and therefore no longer valid.

1. The foundation for this assertion of legal opinion about the status of contracts between Mornington Resorts Pty Ltd and individual lot owners was never explained. It was, however, clear evidence of what Mr Mirabito sought to accomplish through the new Rental JV.

SERVICES PROVIDED BY MORNINGTON RESORTS UP TO 1 JULY 2021

1. As required by the Terms of Settlement, in the lead up to its 1 July 2021 completion date handover, Mornington Resorts Pty Ltd continued to provide services and materials to the OC under the MAA (as well as booking services for individual lot owners in under their AMAs).[55]
2. Mr Byron Searle, who owned apartment 211 from 2016 to 10 January 2023, gave evidence in his witness statement at paras 3 and 11 that: (my italics)
   • 'Between 1 July 2014 and 30 June 2021, I was employed by [Mornington Resorts Pty Ltd] as live-in caretaker, restaurant manager, on-site manager, receptionist, keycard operator and jack of all trades, catering for the needs, demands and requests of 31 apartment owners, their invitees and the OC.'
   • 'In May and June, 2021 [Mornington Resorts Pty Ltd] continued to provide further services and materials to the OC pursuant to the MAA, approvals by the OC, and cl 4 and 6 of the Terms of Settlement.'
   • Mornington Resorts Pty Ltd sent the OC 'emails and invoices for reimbursement and work done and material supplied by it with the approval of, and on behalf of the OC, up to 30 June 2021', being Documents 14.1 of the OC2639/2021 VCAT Application and AD24-AD32 at pages 145-186 and AD50 at pages 259-260 of the Applicants' ebrief documents.
   • 'So far as I am aware, all quotes for work proposed to be done and all invoices listed in Document 14.1 were approved by Doug Cox and John Mirabito on behalf of the OC.'
3. I accept that evidence.

1. During this period, apart from having to wind down its owners corporation and resort management services in the middle of the pandemic, other difficulties arose for Mornington Resorts Pty Ltd and Mr Peter Searle as its owner.
2. The first was that despite having continued to provide its services to the OC under the MAA and rendered 23 invoices totalling $14,041.53 for fees and materials, these were never paid by the OC except for invoice no 2664 for $412.50 (which Mr Peter Searle accepted had been paid[56] - a fact also accepted in closing submission by the OC).[57]
3. The second was that Mr Peter Searle had been unable to collect all of Mornington Resorts Pty Ltd's property at Portsea Village Resort by 30 June 2021. Part of that problem was caused by the difficulties that everyone was experiencing during the pandemic of being able to get help and move around. A bigger part was caused by a not unrealistic expectation that Mr Peter Searle had that the OC wanted to purchase some of this property.
4. At its request, he had prepared and sent the OC's then solicitors a list of property that the OC might purchase from his company, offering it all for a price of $31,180 in an email dated 27 June 2021 attaching a 'Property Schedule'.[58] However, he heard no response until 30 June 2021 when the OC's solicitors responded to him to say:[59]

We take this opportunity to advise that our client does not wish to purchase any of the items belonging to Mornington Resorts (as per list circulated on 27 June 2021).

1. This late notice caused Mr Searle to quickly arrange a hire-truck and drive to Portsea Village Resort to collect and load what he could late that day. He gave evidence, which I accept, that he ran out of puff and had been unable to load it all on the truck, unload it and come back again for the rest of it.
2. The next day, 1 July 2021, there was the contemplated settlement meeting. Mr Searle complained to Mr Cox and Mr Gunner (who was also on the OC committee) representing the OC, that he felt he had been tricked because Mr Mirabito was saying if it was left behind it would become the OC's property. Mr Cox assured him that he could leave his company's property on site and was not required to move any more of it at that time. An issue arose with payment of the settlement sum, Mr Cox requiring Mornington Resorts Pty Ltd to agree to transfer a Room Master licence and database and 7 domain name to Portsea Village Resort Pty Ltd. Presented with a document to sign, Mr Searle states that he crossed out 3 domain names and signed it and gave it to Mr Cox, who said that he accepted that but then said the OC could not transfer more than $20,000 of the settlement sum, so Mr Searle would have to accept it by instalments, which he consented to and which then later occurred.
3. In para 11 of its points of claim, Mornington Resorts Pty Ltd alleged that in regard to that remaining uncollected property, the OC 'confiscated' that 'property owned by the applicants'. The OC denied the claim and did not return it. At para 1.1 - 11.4 of its defence, the OC positively alleged that the 'chattels and property located in the common property belong to the OC' and that 'on 1 July 2021, Mornington Resorts Pty Ltd vacated the common property and left property belonging to the OC'.[60]
4. For the Tribunal proceedings, Mr Peter Searle prepared a revised 'Property Schedule' listing the remaining items he claimed were still at Portsea Village Resort that he wanted back, asserting their cost to be $16,429.59.[61]
5. Those were the items about which the parties joined issue during the running of the hearing and on which evidence was received and cross-examined. Although Mr Mirabito made assertions in his evidence about ownership of the items stored in the storage locker, the OC did not press its positive allegation that it actually owned any of the items in the Property Schedule. Rather, as I shall explain later, it took a different tack and alleged Mornington Resorts Pty Ltd had sold the restaurant items to a third party[62] and that Ursula herself sold light globes - that at some point had been put by the OC in her apartment - when she sold her apartment.[63]
6. Then, on 9 December 2024, after the hearing had been adjourned for final submissions in March 2025, the OC's solicitors acting in the litigation, Best Hooper, acting on instructions from the OC wrote to the applicants' solicitors to advise that items had now been 'located' and moved to a 'secure storage location at Portsea Village Resort' for Mornington Resorts Pty Ltd to collect. I will return later to the items on the revised Property Schedule and that email dated 9 December 2024 from Best Hooper.[64]
7. The result is that while those items were promptly collected by Peter and Ursula Searle on 14 December 2024,[65] the other remaining items were not. So, the claim for the returned items changed its complexion while claim regarding other allegedly 'confiscated' items in the revised Property Schedule remained as the same claim in conversion.
8. In its closing submissions the OC accepted that 'the evidence given at the hearing establishes that on 30 June 2021 Peter Searle attended the resort with a truck and removed certain items listed in the [initial] Property Schedule' and that 'Paul Crichton assisted Peter Searle to load up and remove the items',[66] but otherwise denied liability for any of the items in the revised Property Schedule.

1. As I have mentioned, Mr Cox swore an affidavit on 21 July 2021 in a County Court of Victoria proceeding that Portsea Village Resort Pty Ltd and he (as plaintiffs) brought against Mornington Resorts Pty Ltd (as defendant).[67] While those claims were later withdrawn it shows that despite the Terms of Settlement there were other ongoing issues brewing before the applicants commenced proceedings in the Tribunal on 18 November 2011.
2. Mr Byron Searle gave evidence in his witness statement,[68] and I accept, that during its period of management prior to 1 July 2021, Mornington Resorts Pty Ltd entered into Apartment Management Agreements ('AMA') with himself and other lot owner, including Mr Cox. He points to a 'sample AMA' included in the Brief to Mediator.[69]
3. Byron states that each of the AMAs with Mornington Resorts Pty Ltd as 'Manager' included this termination provision:

Termination of this Agreement is subject to the following:

If the Manager has received a booking for the Apartment prior to service of a notice of termination, the Manager must make reasonable attempts to reallocate the booking to another Apartment.

If the Manager cannot re-allocate the booking, the Owner agrees to grant the Manager a licence after the termination date to accommodate the booking on the same terms as this licence.

1. Byron also states, that he, his sister Ursula and Michael Abell 'did not terminate our AMAs' with Mornington Resorts Pty Ltd and that he 'continued using the services' of Mornington Resorts Pty Ltd as his booking agent until 10 January 2023, which was 'a fact well known to the OC'.
2. That evidence was corroborated by Michael Abell.
3. Specifically, I find that as a fact, Mr Cox as secretary of the OC committee and as a secretary of Portsea Village Resort Pty Ltd knew that this was the ongoing arrangement under which Mornington Resorts Pty Ltd was engaged by the three applicant lot owners and knew that cl 9.4 was a clause which bound Mornington Resorts Pty Ltd and imposed durable contractual obligations on it to its rental customers.
4. I also find that Mr Mirabito knew that too as the Chairman of the OC committee and director of Portsea Village Resort Pty Ltd.
5. When Mr Mirabito bought his lot for his father to use, Mr Searle gave evidence that he provided Mr Mirabito with a similar AMA if he wanted to use Mornington Resorts Pty Ltd as booking agent for his company's apartment. Mr Mirabito's evidence about his lack of recollection of the AMA sent to him to sign was incredulous but I do accept that at that time, he might have been in a state of grief for the loss of his father. Mr Mirabito did concede, however, that he had actually received the rental from the property arranged by Mornington Resorts Pty Ltd and also received statements from Mornington Resorts Pty Ltd showing the fees charged by it in acting for his company as rental agent. It was when, some 11 months after purchasing the lot, Mr Mirabito was charged for fixing a globe without being asked beforehand that it irritated him. It also irritated him that he was being charged for Foxtel at the apartment at a higher cost than his home subscription. Mr Mirabito told the Tribunal it was not about the money but the principle of being asked before you were billed for something.
6. However, despite is denial of recollection receiving an AMA for his apartment it is patently clear that after the Terms of Settlement were reached, Mr Mirabito was well aware of the contractual provisions of the AMA. At the EGM on 9 June 2021, before the vote to approve the Terms of Settlement, he was present and talking when there was discussion with the other lot owners about 'Apartment Management Agreements that individual owners have with MR will become frustrated and therefore no longer valid'.[70]
7. I am therefore satisfied that in its capacity as booking agent for the applicant lot owners, Mornington Resorts Pty Ltd was known by the OC committee Chairman and Secretary to be vulnerable to any change in the arrangements at the reception desk at Portsea Village Resort regarding the applicant lot owner's guests and the issuing to them of the OC's security key cards.
8. Mr Byron Searle gave evidence in his witness statement, and I accept, that:[71]
   • 'in July 2021 the OC implemented 'a new measure' and started charging 'induction fees' and requiring express written notice of at least 24 hours (changed to 48 hours on 23-10-2021) before the OC would permit a key card to be given to the [him, Ursula and Michael] and their invitees.
   • That 'new measure' was then updated as appears in a later email from Mr Mirabito dated 21 August 2021 at 7:35pm:[72] (my emphasis)

... a new measure to be implemented is that the OC will authorise the JV to charge the following fee for the services that the JV provides.

The fee payable is set at 24% of the total rental amount, plus GST, with the following minimum daily fee:

King Superior Suite $100 for the first day of stay plus $45.00 per stay day thereafter,

1 bedroom Apartment $100 for the first day of stay plus $90.00 per stay day thereafter,

2 Bedroom Apartment $120 for the first day of stay plus $120.00 per stay day thereafter, and

3 Bedroom Apartment $175 for the first day of stay plus $175.00 per stay day of a stay.

All figures quoted are plus GST and are will be due payable in advance of the stay.

For Members of the JV, the fee is discounted by 6% and all minimums waived - which aligns with the 18% presently deducted from their rentals. Further, JV Members will not be required to pay in advance as the JV already holds the member's funds through the booking arrangements and deposits they have with it. Members' payments will be deducted at the time of settlement each month.

This discount is in recognition of the membership of the JV in similar manner to other bodies where membership discounts apply for supporting the operation. (RACV is an example, where members receive discounts for restaurants, hotels, insurance, etc.)

For the avoidance of doubt: There will be no additional change for the JV Members. They will continue to be charged 18% plus GST, as previously advised.

1. This is the new charge disputed by the applicants, which Mr Mirabito had told lot owners the OC had authorised to be charged by 'the JV', namely by Portsea Village Resort Pty Ltd.
2. What happened in between is explained by Byron Searle in his witness statement, which I accept and summarise:
   • His sister, Ursula sent an email on 2 July 2021 to the OC committee Chairman, stating that the new induction fees were invalid under the OC Rules:[73]

Just writing to confirm the "induction fee" you have attempted to charge me for booking my room is invalid under the OC Rules. I have no contractual obligation or otherwise to pay this induction fee ... please make sure the $100 induction charge is taken off of my room, and that this charge never occurs to another apartment.

• On 6 July 2021 Portsea Village Resort Pty Ltd sent emails to him and his sister and Michael Abell that said that the induction fees were 'collected on behalf of the OC'. The email addressed to the staff member in control of the security key cards read:[74]

Please note that we do need the owner of Apartment #107 to advise us that they have a guest arriving on that particular date as well as any other date that you have a booking arriving, and that they have approved this booking and they are aware that there is an induction fee for their guest_._

An induction fee of $100 for your guest to enter Portsea Village Resort will be charged.

Please confirm with the owner of the apartment that an induction fee of $100 will be payable to Portsea Village Resort Pty Ltd. This is collected on behalf of the OC. Portsea Village Resort must be given at least 24 hours-notice of the arrival of guests for any of your apartments and agreement that the induction fee will be paid and is agreed to by the owner of the apartment_._

• On 7 July 2021 Portsea Village Resort Pty Ltd sent emails to Byron and his sister and Michael Abell reiterating that that the induction fees were 'collected on behalf of the OC'. In the email to the staff member in control of the access key cards it read:[75]

Please advise Michael that he is aware of all the below charges as quoted in bold. Please advise if you have any other guests arriving - as described we need 24 hours-notice of any arrivals in your apartments and they will be under the same terms that Michael is agreeing to.

Please note that we do need the owner of Apartment #107 to advise us that they have a guest arriving on that particular date as well as any other date that you have a booking arriving, and that they have approved this booking and they are aware that there is an induction fee for their guest.

An induction fee of $100 for your guest to enter Portsea Village Resort will be charged. Please confirm with the owner of the apartment that an induction fee of $100 will be payable to Portsea Village Resort Pty Ltd_. This is collected on behalf of the OC._

Portsea Village Resort must be given at least 24 hours-notice of the arrival of guests for any of your apartments and agreement that the induction fee will be paid and is agreed to by the owner of the apartment.

• Michael Abell then also protested the induction fees and 'reluctantly paid them under duress ... (as did I)', referring to an email from Mr Abell dated 7 July 2021 which read:[76]

To: admin@portsea-apartments.com.au

Please be advised I have a booking for 17 July for 13 nights in name of *** Bacon.

Payment has been collected by Mornington Resorts. I accept your cleaning charges but reluctantly and under duress accept your introduction charge of $100. I pay substantial quarterly fees to OC for which I expect this service. Am I to be charged $100 when I stay in my apartment?

• That despite these written emails objecting to payment of the new induction fee - as being unauthorised - Portsea Village Resort Pty Ltd stated that it would not give any of their invitees guests key cards unless the "induction fees" were agreed and paid in advance with a credit card, pointing to an email sent to Mornington Resorts Pty Ltd on 14 July 2021 that read:[77]

Cc: Portsea Apartments admin@portsea-apartments.com.au

Please be advised that we have not received written consent from the owners of apartment 110 & #107 for their acceptance of the cleaning & induction fees that their apartments will be liable for. ...

Please advise of any arrivals for this weekend and forward written permission from above owners for these bookings and the credit card details for cleaning and induction fees owing.

1. Byron states that because of these restrictions being placed on him, Ursula and Michael, they had Mornington Resorts Pty Ltd acting for them in order to perform the function of 'giving prior written notice of arrival to the OC and giving [their] invitees key cards which the OC refused to give to the owners' invitees unless "induction fees" were paid ... in advance'.
2. He also said that what happened was that:

Instead of giving key cards to my invitees and the invitees of [Ursula and Michael], the OC made the invitees wait until [a Mornington Resorts Pty Ltd] employee attended on site to give an OC key card to [their] invitees.

1. I accept that evidence. It was not contradicted.
2. In confirming that, Michael Abell also states at para 21 of his witness statement:

The OC's conduct, especially from John Mirabito and Jo Higgins, was increasingly threatening and bullying to me and the other Applicants.

1. Mr Abell was not challenged on that evidence to the Tribunal and I accept it, save that it appears that Jo Higgins was an employee of Portsea Village Resort Pty Ltd, of which the OC committee chair, Mr Mirabito was sole shareholder and director.
2. What is extraordinary is that the chair of an owners corporation's committee would be 'threatening and bullying' towards a lot owner.
3. However I find that based on this evidence of these two lot owners, that was occurring at this time with their owners corporation in Portsea.
4. While Ursula Searle did not give evidence, her brother Byron gave the same evidence at para 24 of his witness statement which was also not challenged:

The OC's conduct, especially from John Mirabito and Jo Higgins, was increasingly threatening and bullying to me and the other Applicants,

None of [us], including myself and [Mornington Resorts Pty Ltd's] sole employee, Suzie Cope, wanted to be at Portsea Village Resort alone. We decided there would be "safety in numbers", so we agreed to accompany each other on our next visit to Portsea Village Resort after the August/September 2021 COVID lockdown.

1. I find that at that time this was how Mr Mirabito also made Byron feel. I also accept Byron can speak for his sister Ursula, as another applicant lot owner. Byron's statement was verified by him before being admitted into evidence by the Tribunal. Ursula was present during much of the hearing, and the OC did not seek to cross-examine her.
2. While the use of same words in the witness statements resembles cut and paste text, I have no reason to doubt that they are truthful.
3. Mr Peter Searle in para 57 of his witness statement also made the same statement as his son Byron and Michael Abell.
4. I have discussed my assessment of Mr Peter Searle' evidence generally. I also accept his evidence about how he was made to feel. As I have said, as a former barrister Mr Peter Searle knew the risks of not telling the truth to the Tribunal when giving evidence under oath. But that is not why I found this particular evidence to be credible, even for a man of his stature. Despite appearing unflappable and able to take things in his lawyerly stride at the hearing, I have little doubt that this would have been a very distressing time for him as a father of adult children who he had help to purchase investments, and as the owner of his business, Mornington Resorts Pty Ltd.
5. The applicant lot owners, and Mr Peter Searle's business in acting for them to book their apartments and collect their rentals, were being subjected to new and changing, increasingly onerous, measures by the Chairman of the OC's committee. These were not simply financial measures but measures that restricted the lot owners and their invitees having access to the OC's key cards at this uncertain time in the pandemic when movement out of metropolitan areas and workplace restrictions were still impacting business operating conditions and people in their day to day lives.
6. This conduct of demanding upfront fees from the three lot owners - Byron, Ursula and Michael - before security key cards would be issued to their guests booked through Mornington Resorts Pty Ltd as the service provider of their choice continued. They had nothing they could do but pay the fees if they wanted to let out their lots to guests to use the resort facilities, and access their individual apartments, which were part of the OC's same security card system. That system was paid for and owned by the OC which its management committee had permitted Portsea Village Resort Pty Ltd to control and now charge a fee for providing that 'service, which it purportedly 'collected on behalf of the OC', according to Mr Mirabito.
7. In his witness statement, Byron Searle describes the effect on the lot owner applicants. He states (and it is not disputed) that Portsea Village Resort Pty Ltd continued to charge Byron, Ursula and Michael Abell induction fees' and 'prevented us as owners of apartments 107, 110 and 211 and our invitees, from obtaining key cards or access to our apartments 107, 110 and 211, unless prior written notice of at least 24 hours (changed to 48 hours on 23-10-2021) was given, and "induction fees" were paid in advance.
8. There was further correspondence back and forth but the lines had been drawn by the OC committee Chairman, Mr Mirabito directing Portsea Village Resort Pty Ltd, sending emails both on its behalf and as Chairman of the OC's committee.
9. On 22 October 2021 Peter Searle says, and I accept, that he and Byron and Suzie Cope arrived at Portsea Village Resort 'for apartment 211 and 110 check-ins'. He says that he said the following:

I told Jo Higgins at reception that the owners of apartments 110, 211 and 107 would no longer pay the "induction fees" and would make our own arrangements to give key cards to the owners' invitees and guests.

1. That evidence was also not contradicted, and I accept it as a fact. It was also corroborated by Byron.[78]
2. Mr Peter Searle says that Byron's guest required a portable cot 'so we went to the storeroom where [Mornington Resort Pty Ltd's] porta cots were stored, but the storeroom was locked'.[79] I also accept that evidence.
3. He then says this exchange occurred: [80]

When we returned to the rear carpark. Jo Higgins suddenly rushed up to me in a threatening and bullying manner.

Jo said to me in a loud, threatening voice - "We will go into your apartments and take all the linen off the beds. You cannot use the porta cot without payment."

I said - "You are not permitted to enter our apartments to remove the linen. We own all the porta cots and rollaway beds."

Jo then went to reception and came back a few minutes later.

Jo said - "You can use the linen in the apartments for $50 each and the porta cot and linen for $30 - a total of $130".

Jo said - "Do you want to pay by credit card now?"

Jo Higgins and I then walked to reception together, I handed Jo my credit card, Jo transacted $130 on my credit card, and Jo handed my credit card back to me. I paid the $130 demanded by the OC's agent, Jo Higgins, under duress.

The 1st Applicant [namely Byron], Suzie Cope and myself left Portsea Village Resort as soon as we could, after [Byron's and Ursula's] guests had arrived on Friday, 22 October 2021, and we had handed them key cards and checked them into [Byron's and Ursula's] apartments 211 and 110.

1. His account of the exchange in the carpark and the last paragraph is corroborated by Byron's statement.
2. I accept Peter Searle's and Byron Searle's evidence about this, but note that Mr Peter Searle's statement about $130 being demanded by 'the OC's agent' is a submission rather than evidence of any fact. In relation to that part of his evidence I accept that the demand was made by Jo Higgins in the reception area and that the $130 was paid by Peter Searle under duress, at least in the sense of having no alternative but to pay it if the incoming guests were to have linen on their beds, and thus, in substance, paid 'under protest'.
3. The Tribunal also received evidence about where the linen and portable cots were stored. The 'storeroom' referred to is a caged area at the top of the stairs within the common property, marked on exhibit A,[81] being on the first storey.
4. Byron says that on that same Friday, 22 October 2022, Mornington Resorts Pty Ltd received an online booking for the following night and so at 1:52pm it sent an email to the OC 'to give the OC notice of tomorrow's booking as per the new "notice" measures adopted by the OC'.[82]
5. Jo Higgins responded to Mornington Resorts Pty Ltd at 2:24pm as follows:[83]

Cc: Portsea Apartments Subject: RE: Arrival - #110 Sat 23rd Oct

Please advise if this booking is for apartment #110.

Please note the outstanding invoice of $598 for apartment #110 must be paid before any new guests are admitted to the property.

Please refer to the invoice we emailed to Ursula Searle on Thursday 21 October 2021. Please advise if you wish us to clean the apartment.

Please advise if you would like us to charge the below credit card for these charges for Apartment #110.

Please be advised that an outstanding invoice of $985.25 is also outstanding for Byron Searle for Apartment #211 as emailed to him on Thursday 21 October 2021.

Please note we must have a phone number for guests and proof of vaccination on arrival if not before. Check in is available until 5pm.

1. Byron Searle states and I accept that Mornington Resorts Pty Ltd emailed Jo Higgins at 3:04pm with credit card details to pay the amount of $748 demanded in respect of Ursula's apartment, querying the GST on the cleaning charge as being 10% not $25,[84] to which Jo Higgins replied agreeing,[85] before confirming the payment had been processed.[86]
2. The next morning, Jo Higgins then emailed Mornington Resorts Pty Ltd to tell it that there was a new requirement that the 24 hour notice required had now been increased to 48 hours' notice, copying Ursula, and the OC committee Chairman, John Mirabito. The email read:[87]

Cc: Portsea Apartments ; john@azzure.com.au; ursularose.s@***

Thank you for your email. Please authorise the transaction of the JV fees of $110 for Portsea Village Resort to issue keys etc to your guest in #110. I refer to the email of 15 August 2021 - Update & New Measures copied in to all owners regarding External Managers.

Please note we do need 48 hours' notice of guest arrival.

Please do not hesitate to contact us if you require any further information.

1. That email was at 11:46am on that Saturday morning, sent from the email address used by the Portsea Village Resort reception office.
2. At 11:52am Jo Higgins sent off her next email to Mornington Resorts Pty Ltd stating that she had transacted $735.50 on Peter Searle's credit card and attached an EFTPOS receipt.[88]
3. In response, Mornington Resorts Pty Ltd sent an email 'Letter of Demand' to Portsea Village Resort Pty Ltd, two former employees of Mornington Resorts Pty Ltd now working at Portsea Village Resort Pty Ltd, and the OC committee Chairman, John Mirabella and Secretary, Doug Cox stating:

To: dougbcox@***; john@azzure.com.au; jo@portsea-apartments.com.au; jenny@portsea-apartments.com.au

Subject: LETTER OF DEMAND: intentionally interfering in contractual relations

I confirm that you are continuing to interfere in our contractual relations by phoning our contracting parties and sending emails from admin@portsea-apartments.com.au to third parties who have contracted with Mornington Resorts Pty Ltd.

The Portsea Village Resort telephone records provide a match between our contracting parties' telephone numbers and your outgoing telephone calls to our contracting parties' telephone numbers since 1 July, 2021.

Jo and Jenny have breached their employment contracts and fiduciary duties to Mornington Resorts Pty Ltd, their former employer, by unlawfully using confidential information they obtained during the course of their employment.

You have also sent emails and phoned contracting parties who have not booked an apartment, but have purchased a gift voucher from Mornington Resorts Pty Ltd.

You have interfered with owners' invitees who have booked apartments 110, 211 and 107.

You have also charged unlawful "induction fees" to the owners of apartments 110, 211 and 107 without any legal or contractual basis.

You have prevented us accessing and/or using our own property and equipment.

One example yesterday was a porta cot which we own and Byron wanted to place in his apartment, 211, for his invitee.

You refused us access to our own porta cot on the basis "you left it".

You are not applying the same "principle" to David Long's golf clubs, Frank's bicycle and other property "left" by owners and their invitees.

I confirm that you have caused damage in excess of $160,000 by interfering in our contractual relations with our contracting parties.

Unless you rectify the abovementioned breaches and undertake not to continue such conduct within 14 days, we will issue proceedings against you without further notice.

1. The demand went ignored.
2. Jo Higgins wrote instead to Ursula, as lot owner, at 12:29pm to say this:[89]

I refer to the attached email that was sent to you on 15 August 2021 re External Managers.

You are welcome to attend Portsea Village Resort to give your guest the keys to Apartment #110 today. If you wish us to issue keys to your guest there is a charge for this guest as mentioned previously of $110. These charges do need to be pre-paid before your guests arrival to avoid embarrassment to the guest.

Please advise if you will be issuing keys yourself.

1. Then at 12:44pm, Jo Higgins backed it up with a separate email to Mr Peter Searle at Mornington Resorts Pty Ltd to reiterate that she would not be giving a key unless the demanded fee was paid:[90]

Please be advised that if the $110 is not paid, Ursula will need to issue the keys herself.

Please advise as soon as possible to avoid disappointment to Ursula's guest.

1. Mr Peter Searle responded on behalf of Ursula at 1:21pm to say all that needed to happen was for the existing 'hard key and swipe key' to be handed to Ursula's new guests:

Please give Ursula's incoming invitee this afternoon, the same hard key and swipe key which Ursula's outgoing guest left this morning.

If you think there is an additional fee to be paid, please provide a tax invoice.

We will then consider your tax invoice together with our other alternatives.

Please give us an amended tax invoice and receipt for the amount of $735.50 which we paid to you under objection and under duress on behalf of Ursula yesterday.

Please note that our objections are to the so-called "induction fees".

We do not object to housekeeping fees which we have agreed to.

1. At 1:53pm Jo Higgins ignored that request and replied to Mr Peter Searle at Mornington Resorts Pty Ltd again demanding payment of a fee and sending his company an invoice for 'your guest':[91]

Please find attached tax invoice for guest arriving today for apartment 110.

Please provide credit card details for the payment before the guest arrival to avoid disappointment to your guest.

1. If this was simply banter it would be different. It was not. It impacted individual lot owner members of the OC, who are the applicants to these proceedings.
2. This all occurred under Mr Mirabito's watchful gaze as the elected chair of the committee of the OC, and as the director controlling Portsea Village Resort Pty Ltd which controlled the OC's security key card system. He did nothing to resolve the issue for those members of the owners corporation.
3. An owners corporation is a statutory body corporate with statutory functions and statutory duties under Victorian laws that have been in force for years. It is not a private company. This sort of conduct is egregious for an owners corporation in Victoria.
4. The OC's lot owners, Ursula, Byron and Michael, had done nothing wrong. No allegation of any wrongdoing was made against them and no witness during the hearing suggested that any one of them had done anything wrong.
5. It is completely inconsistent with the statutory object of the OC Act requiring owners corporations in Victoria to have procedures in place to promote the resolution of disputes, not stoke them.
6. That this was not untypical of some of the aberrant behaviour that sometimes occurred during the pandemic, is no excuse at all for adults elected by lot owners to chair and lead committees, who are charged with significant statutory responsibilities under Victorian law. An owners corporation exists to act in the interests of all its lot owners and not some. Its functions, duties and powers - and those its lot owners in general meeting entrust to its committee - are not playthings of power.
7. On my own reading the emails that passed during this period that were submitted into evidence, and from hearing evidence to the Tribunal from the witnesses called by the parties to give evidence at the hearing, there was absolutely nothing in what Ursula, Byron or Michael said, or were asking the OC to do, that was in any way disrespectful of the staff that the OC committee and its chair and secretary had allowed to control the security key card system and to issue the key cards for the OC as their owners corporation.
8. The way they were treated at this time must have caused them considerable anxiety and stress not knowing whether they would be able to honour contractual commitments made to their guests. Their unsuspecting guests were pawns being used against these three lot owners in this brinksmanship being played out in emails now clearly on display in these documentary exchanges from the records of the OC and email servers, and admitted into evidence into these legal proceedings.
9. The feigned concern of avoiding 'disappointment to your guest' if the unilateral demand for payment by the newly installed manager operating the OC's key card system was not met, was clearly a threat to do something financially harmful.
10. In law that amounts to financial duress.
11. It is patent from these emails that if payment was not made by these lot owners who had not chosen to use Portsea Village Resort Pty Ltd's booking services, that the OC committee members controlling the OC's access keys who sat behind the scenes controlling those working at the reception desk in the common property would not allow these lot owners' permitted guests to use and enjoy the amenities of the land subdivision attached to their lot ownership.
12. This was also happening in circumstances where it was abundantly clear that that these paying guests of the lot owner members of the OC had booked the use of their lots with their authority. The OC's licensee at the reception desk, Portsea Village Resort Pty Ltd, in control of the OC's security key card system, had their names in writing.
13. And for the unsuspecting guests, it should have been obvious at this time that when they arrived at the reception desk to register and check-in to their booked apartment at the resort they would be innocent bystanders.
14. Whatever Mr Mirabito's stated or asserted reasons for enabling and not stopping this conduct in his capacity as OC committee Chairman, one thing was obvious. Mr Mirabito's intensely personal gripe was against Mr Peter Searle, who he simply did not like.
15. But Peter Searle was not a lot owner. He and his company were acting as agent for Ursula, Byron and Michael. That is permissible. They were lawfully entitled to continue to use his company's services. They clearly trusted him with their financial affairs and to receive their money as agent. There was no reason for them to use Portsea Village Resort Pty Ltd.
16. Further, from my assessment of all the evidence presented to the Tribunal, Mr Peter Searle's actions at this time were not those of an aggressive or hurtful man, which Mr Mirabito wanted the lot owners to believe in the emails he was circulating to lot owners behind the scenes. It was clear that at this time, Mr Peter Searle was concerned for his children and for his other client Michael Abell (and no doubt for their guests), and was struggling to understand why he personally was being treated so poorly in continuing to provide an ongoing contractual agency service to them as lot owners.
17. He tried to explain this in his next email to Jo Higgins, sent at 2:06pm, which he copied to Ursula, his daughter:

Cc: Portsea Village Resort ; ursularose.s@***

Mornington Resorts Pty Ltd only acted as the owner's agent in this online booking.

If you are charging anyone a fee, it is to the owner.

Is the cleaning fee meant to be for after the guest's stay?

There is no fee for giving keys to owner's invitees.

There is no "provision of keys to MR guest" because there is no "MR guest".

1. Not having said anything in the email conversation to this point, 11 minutes later Mr Mirabito presents his actual voice. To authorise the staff controlling the security key cards in the OC's reception office, and replying not to Mr Peter Searle's 12:00pm email 'letter of demand' but to the email he had sent on behalf of Ursula at 1:21pm, Mr Mirabito writes to the reception staff, copying in Mr Peter Searle and the OC committee's secretary Mr Doug Cox:

Cc: Portsea Village Resort ; ursularose.s@***; Peter @ PVR ; dougbcox@***

We do not have any relationship with Mr Searle or MR. Neither is able to request, let alone demand anything of you.

If Mr Searle or MR wish to discuss any matters pertaining to the operation of PVRpl their enquiries should be directed to the Directors of PVRpl.

Please delete any correspondence received from him or MR.

1. This direction from the OC committee chair is clear. It is an unambiguous direction to the staff behind the reception desk on the common property that they cannot deal with a booking agent for these lot owner members of their owners corporation. The notion of there being any 'choice' given to lot owners as to who they could use as booking agents after the 'joint venture' company was established by Mr Mirabito never existed for these lot owners.
2. Mr Peter Searle did not rise to the bait. He firmly but politely, in his lawyerly fashion, addressed an email back to Mr Mirabito and to Portsea Village Resort Pty Ltd (as had been indirectly requested in Mr Mirabito's cc to him) again copying Mr Cox and also others, including those for whom is company acted, Ursula and Byron and Michael Abell:

Cc: Portsea Village Resort ; ursularose.s@***; dougbcox@***; Ed Clark

Cc: ... ,...Portsea Village Resort , ... , Maintenance , Jenny @ Portsea Apartments , Portsea Apartments

I refer you to the abhorrent actions of your agent yesterday whilst in attendance at PVR together with you Byron.

Mr Peter Searle is barred from entering the Portsea Village Resort Common Property and is not to be granted access to the Portsea Village Resort Common Property..

I have copied all PVR Members and personnel on this email.

1. It is unnecessary to set it out any further. All lot owners were emailed it by the OC committee Chairman.
2. It is highly inflammatory and was not substantiated by evidence from any witness called by the OC at the hearing to contradict the evidence of Byron and his father who were actually there the day before.
3. I have accepted Byron's earlier evidence about what took place in the car park as well as that of Mr Peter Searle concerning what took place in the reception area when he went to pay.
4. Byron, who Mr Mirabito - in his broadcast email to the OC's members making serious accusations against Mr Peter Searle - knew was 'in attendance at PVR together with you Byron', was not challenged on his evidence in any significant way. Nor was there any suggestion that the OC or anyone from the OC committee ever asked Byron what had actually occurred or even Suzie Cope, who was also present at Portsea Village Resort on that day.
5. Byron's written evidence to the Tribunal about Mr Mirabito's unsubstantiated email allegations is short and to the point:

Mirabito's email to me and the other Applicants has no factual basis that I am aware of, but states "Security camera footage has been downloaded and stored" ...

1. Mr Peter Searle's evidence in his written statement at para 98 was also as follows:

The only "notice" I received of any potential "barring" is an after-the event email from Mirabito dated 23-10-2021 Subject "PVR COMMITTEE DIRECTION" which was not sent to me, but states that I have been "barred".

I responded to that email in my email to the OC dated 25-10-2021, which accurately and contemporaneously records the relevant events of Friday 22-10-2021.[94]

1. Mr Peter Searle was cross examined extensively. His evidence was consistent with that contemporaneous document dated 25 October 2021 which relevantly stated:[95]

For the record, I did not threaten, bully or harrass Jo or any other staff on Friday, when Byron and I arrived for 211 and 110 check-ins.

In fact, the opposite occurred, after Jo rushed up to me in the rear carpark.

Jo said - "We will go into your apartments and take all the linen off the beds. You cannot use the porta cot without payment."

I said - "You are not permitted to enter our apartments to remove the linen. We own all the porta cots and rollaway beds."

Jo then went to reception with Paul and came back minutes later.

Jo said - "You can use the linen in the apartments for $50 each and the porta cot and linen for $30 - a total of $130".

She said - "Do you want to pay by credit card now?"

We then walked to reception together, and Jo transacted $130 on my credit card. The OC's video footage and independent witnesses will confirm that I did not threaten, bully or harrass Jo or any other staff.

"Security camera footage has been downloaded and stored.",

implying that it corroborates your unfounded allegations.

It does not and will not corroborate any of your unfounded allegations, as they are false allegations.

"Sadly, the bullying and harassment of PVRpl staff has continued this morning via many emails."

This is a reference to my Letter of Demand sent to PVR P/L, Jo and Jenny.

My letter of Demand to PVR P/L, Jo and Jenny should be judged on its legal merits and is not bullying or harrassment.

It contains a legal threat, being a Letter of Demand.

The OC has misused my Letter of Demand as an improper basis to bar me from entering the common property.

In reality, my Letter of Demand to PVR P/L, Jo and Jenny does not involve the OC.

But your conflicts of interest have led you to abuse your OC powers with your PVR P/L directors' hats on.

1. In answering questions under cross-examination about an undated type note that Jo Higgins had prepared,[96] Mr Peter Searle's answers were clear, and honest, and I accept them. He made proper concessions and including that he had raised his voice and so had Jo Higgins, but not to her level he said. I accept his account and his recollection of the words spoken at that time which he had recorded contemporaneously in his email response to the allegations against him by the OC committee Chair. I have little doubt that he wrote that response with the understanding that a day would probably come when he would have to give sworn evidence about it, given the litigation that had already commenced and the legal demands he had already made.
2. Mr Crichton's witness statement was made 3 years later. He was still working for the OC at the time as its maintenance officer and says he was not present for the whole argument and did not know what it was about. He was also not privy to the new measures being put in place by the OC committee or the emails back and forth leading up to it. While he says he heard some words and observed some behaviours, he makes no mention that Jo Higgins raised her voice too. His omission to mention that in the argument that was clearly taking place, undermines the weight I can attach to his account of what he recalls he heard or saw. What others might have told him is simply hearsay.
3. While I have little doubt that there were tensions on the day and voices were raised, as I have said I accept the evidence of Byron who was there and of Mr Peter Searle whose evidence was far more credible than the evidence of the witnesses called by the OC. As I have also said, Mr Peter Searle had also sent his contemporaneous email to the OC in 2021, which I accept is reliable.
4. If the incident had happened as Mr Mirabito had asserted in his email to lot owners the following evening it would have been a simple thing for the OC to download and save the security video footage as Mr Mirabito said had been done. The OC did not discover it and it was never produced by the OC.
5. Mr Mirabito was not physically there 'at PVR' to witness or hear anything. Nor did he say in his email remonstrating against Mr Peter Searle that he had actually looked at the allegedly downloaded and stored 'security camera footage'. Nor did he say that in his evidence to the Tribunal. In his evidence at the hearing he actively misled the Tribunal in his oral evidence about what he was actually doing that Friday trying to create an impression that the staff on reception were dealing with events on their own. When the actual events were taking place he sought to distance himself, pretending that he was busy somewhere, doing something else. In truth, it emerged in his later evidence that he was making phone calls to the staff on reception, giving instructions and actively orchestrating machinations behind the scenes.
6. I accept Mr Mirabito's evidence he was not physically present at Portsea Village Resort. There was also no evidence that he had been to Portsea Village Resort to view the video footage of what occurred before he sent his group email to all lot owners and he did not say he had seen it.
7. What was evident to the Tribunal is that Mr Mirabito is prepared to construct a narrative and do so without factual basis or direct knowledge.
8. What he stated in his email to lot owners on the Saturday evening at 18:18pm is unreliable. I also reject, as completely unreliable, the purported minute of 'emergency committee meeting' purportedly held earlier on 'Saturday 23 October, 2021 via telephone between 10.00am and 1.00pm'.[97] It had not been discovered by the OC, and is unsigned and not referred to as having been tabled at any later meeting of the OC committee.
9. Mr Cox gave no evidence about such a 'meeting' being actually held.
10. The evidence Mr Mirabito actually gave was that he, individually, telephoned around the group and had discussions with people separately. His evidence about what he discussed with each was unreliable.
11. No other committee members were called to give evidence to the Tribunal
12. A meeting requires people to come together, to assemble for a particular purpose: 'A gathering of people for a common purpose (such as to discuss business)', according to the Merriam-Webster online dictionary. The Macquarie Dictionary relevantly defines it for an organisation as:

4. an assembly of people with responsibilities towards an organisation, held to conduct the business of that organisation.

1. There was such no assembly of persons and no discussion together even in a group phone call to the members of the committee. The minute Mr Mirabito made at some point of there having been an actual OC committee meeting on that date is therefore false.
2. However, I record at this point as relevant to the state of knowledge of Mr Mirabito at that time about the items that had been left behind by Mornington Resorts Pty Ltd. In his the 'PVR COMMITTEE DIRECTION' email to all the members of the OC he said the following:

Your agent also attempted to break into the linen store, claiming he owns items in the store.

The dishonest email circulated this morning failed to mention that your agent provided the OC's solicitors with an extensive list of assets it owned and invited the OC to purchase the items - copy of emails and list attached. The OC declined to purchase any items and the items were removed from the premises by your agent.

The contents of the linen store were not on the list and are definitely NOT owned by your agent (the linen is in fact owned by a third-party contractor), neither are the porta cots.

I also draw your attention to the Settlement Terms to which your agent was paid $76,250 by the Owners Corporation. In the Settlement Terms, Clause 7(c) states:

The Common Areas will be vacated by MR and MR shall remove all property belonging to MR and leave all property belonging to the OC in place including all files, written agreements and other records of the OC;

I again stress: Your agent is not a Lot Owner at PVR and therefore has no more rights at PVR than the bus driver that stops out the front of PVR (no disrespect to the bus driver intended).

1. That email shows that as the OC committee Chairman he understood that the listed assets provided by Mornington Resorts Pty Ltd in June 2021 were said to be 'owned' by it. He also knew there were porta-cots and linen in the linen store which had been locked. Without foundation he accused Mr Peter Searle of 'lying'. What Mr Mirabito might not have been told by the staff members who were working in the reception at Portsea Village Resort that day, was that Byron as a lot owner had actually been trying to access the linen-store on the common property, where the property stored for guests of his lot to use was kept, together with his father.
2. By the next day, Mr Mirabito and Mr Cox had received a detailed written account from Mr Peter Searle - in the email sent by him to them on Monday, 25 October 2021 at 1:15pm - of what had happened on the Friday in the car park.
3. I have already said that there was no evidence given by either Mr Cox or Mr Mirabito that they ever spoke to Byron or Susie Cope. Nor did Mr Cox or Mr Mirabito give evidence to say that either had ever looked at any video footage that Mr Mirabito had asserted had been 'downloaded and stored'.
4. I find that Mr Mirabito's assertion that the video footage had in fact been 'downloaded and stored' was (as Mr Peter Searle characterised it at the time writing to him and Mr Cox) done by Mr Mirabito so as to falsely imply that it corroborated the otherwise unsubstantiated allegations Mr Mirabito made in his 'PVR COMMITTEE DIRECTION' email that Saturday evening. Mr Mirabito had never seen it and nor was it ever 'stored'. That, in substance, was a false assertion even if it might have been automatically downloaded by the system. Mr Mirabito was not being honest at the time, just as he was not honest in his evidence to the Tribunal when under oath.
5. The morning after receiving the 'PVR COMMITTEE DIRECTION' - Sunday 24 October 2021 at 11:30am - Jo Higgins sent Byron an email with two tax invoices: for his apartment 211 and Ursula's apartment 110.[98] Byron says he received it.
6. That afternoon, Michael Abell sent Mr Mirabito an email at 2:02pm responding to Mr Mirabito's PVR COMMITTEE DIRECTION email the evening before. In it he expressed his frank concern as a lot owner:[99]

The contents of your email amaze and disturb me. Is it possible for me to view the security camera footage first hand? It may enable me to make some decisions.

1. The temerity of Mr Abell's simple request asking to see the video evidence of what had been asserted to all the lot owners by the OC committee's Chairman, enraged Mr Mirabito.
2. Mr Mirabito gave his response 7 hours later at 9:14pm, seemingly unable to control himself, copying in not just all members of the OC but its contractors. In it he attributed statements to people who were not called to give evidence: (all original emphasis)

So you need to see footage. The word of Jo, Olivia, Paul and many Members who are currently in residence at Portsea is not enough for you. Did you bother to ask your mate before you dare to call us liars? Suzy was there also, standing right next to Peter. Perhaps Suzy has enough integrity to tell you what actually happened

'It may enable me to make some decisions?'. Do really believe I am that stupid? Tell Peter he can view the footage in the courtroom with everyone else. Yeah, Yeah, he will say there are no camera's [sic] in that Section. What he should say is there weren't any camera's in that section

If it is not abundantly clear, you can shove viewing the security footage up your arse!

Now Michael, I need you to explain something to all the Members.

I will be recommending to the PVRpl Board that PVRpl cut all ties with the recalcitrant owners and remove their supplies. Peter did state in writing that he could operate the PVR rentals offsite and for that matter, many others do. RT Edgar manages quite well. They rely on their own resources.

I have copied in all Members, PVRpl staff and OC Contractors as your statement is an offence to each. Despite my footer to the contrary, please feel free to share this email with your mate.

1. I have not included the whole of this tirade from Mr Mirabito. It is inflammatory, contained lewd comments and serious accusations, and was uncorroborated by any evidence.
2. This also is not how an owners corporation committee Chairperson should behave or talk to a lot owner or put in an email sent to all lot owners and third parties.
3. By that Sunday night, Mr Michael Abell was now also in the sights of the OC committee's chair who threatened him with ramifications exercising his director's authority in the same email he had addressed to all members of the OC and its contractors:

I will be recommending to the PVRpl Board that PVRpl cut all ties with the recalcitrant owners.

1. Mr Mirabito was also denying Mr Abell access to the OC's security footage, while demanding public explanation from him to 'all Members' by Mr Michael Abell about other irrelevant things, in an expletive ridden scurrilous email.
2. Mr Abell was never given the video footage. It was not produced by the OC to the Tribunal. Mr Mirabito gave an explanation to the Tribunal to the effect that it was never actually saved and was rather automatically deleted. That explanation is irrational if not spurious.
3. If the video footage existed and the incident was as serious as alleged, why would it not be viewed, and actually kept as video evidence?
4. Now confronted by the accusations broadcasted by the OC's committee Chairman against him personally, Mr Michael Abell was forced to respond to the dozens of copied in members of the OC. And he did so in a polite and comprehensive email the next day. While no allegation was ever made by the OC against Mr Michael Abell, in fairness to him as a lot owner and party I set out the relevant parts:

Cc: [OC members' and other names redacted, other than the following] 'dougbcox@***; byronsearlel@***; 'ursularose.s@***; 'Portsea Village Resort' ; 'jo@portsea-apartments.com.au' ; jenny @portsea-apartments.com.au>; 'Maintenance' ; 'Portsea Apartments'

Firstly, I have not called anyone liars. I simply asked was it possible to view the video footage, to understand first hand the severity of the alleged verbal assaults. Peter is not my mate. I have never had lunch with him, never been to his house or he to mine, so that makes him an acquaintance. I would be interested in Suzy's views and also Jo's. I see Peter has denied it in his email to you.

I do not believe you are stupid at all. I am not committed to MR forever and simply stayed with them until the dust settled and I saw how many owners stayed with MR. I was surprised so few.

I do not take kindly to your foul language and abuse in your email telling me shove something up my arse. And copied to all members including female owners. Very unprofessional too as chairman of OC.

I have no knowledge whatsoever of adjustments of $544 made on rental statements 7 years ago. You would have to ask MR.

The photos[100] are irrelevant and hardly sexually explicit ...

The $6800 deduction is nothing to do with me. Ask MR.

I am not an apologist for MR, but GST has always been charged since GST became law. Grange and Synergy[101] charged it and I would assume Grange, Synergy and MR all remitted the tax to ATO.

If any of them did not it would be fraud. In my case as I was registered for GST I received the GST from Grange, Synergy and MR and I remitted it quarterly to ATO.

I reiterate GST was not deducted from 107 because I was registered for GST. Am I the only owner who was registered for GST?

I hope you are not referring to me as recalcitrant. I have been supportive of much of your work in getting a better deal for owners. But I am not supportive of personal attacks and abuse.

Sticking something up my arse is offensive. Apologies to the lady recipients but your words, not mine.

I look forward to the day when harmony returns to PVR. I am considering selling as it's a pretty minor investment, but my appetite got wetted by the prospect of selling the site for $50m plus. The units are dated.

1. The following day, the OC committee Secretary and Chair confirmed the stance Mr Mirabito had taken in his email. Notwithstanding Mr Abell's clear response, Mr Cox and Mr Mirabito sent a joint email to Byron, Ursula and Michael Abell (and others) stating: (emphasis added)

To: byronsearle1@***; 'Ursula Searle'; mabell@***

Subject: FW: Byron, Ursula and Michael's Apartments

As a result of your failure to accept the terms and conditions for the services provided by PVRpl, all services to apartments 107, 110 and 211 will cease immediately. This includes all housekeeping, linen and towel services, supplies, etc.

Further, the Owners Corporation has advised PVRpl (the Manager appointed by the OC) that PVR Owners have been issued with permanent cut keys and as such has determined that the issuing of the cut keys satisfies point 6.1 and 6.3 of the OC rules. As the cut keys are permanent in nature, Rule 6.4 will naturally not be enforced.

All other OC Rules, including 6.2, 6.5, 6.6 and 6.7 continue to apply and must be adhered to so as to comply with all safety and other laws which operate to protect the Owners, Employees, Contractors and any Invitee and/or Guest. Failure to comply with the Owners Corporation Rules is at your own risk.

Should you require a copy of the OC Rules a copy shall be made available for viewing.

1. Although Mr Mirabito, in his argumentative evidence to the Tribunal sought to characterise his actions as wearing different hats - one as OC committee Chairman and the other as director of Portsea Village Resort Pty Ltd - there is no escaping from his written statement in this email that he and Mr Cox had authorised Portsea Village Resort Pty Ltd to be the 'Manager appointed by the OC' to control and issue keys and key cards to lot owners, that enabled their Invitees to access the resort areas in the common property..
2. In giving his evidence to the Tribunal, not only had he disregarded this email, he had disregarded that that he had told lot owners in his earlier emails that the OC committee had discussed placing key card access under the control of Portsea Village Resort Pty Ltd at its 21 June 2021 committee meeting - 'To grant the Rental JV sole and exclusive use of all plant and equipment on the Property owned or supplied by the OC which the Rental JV requires to operate the Rental JV business' - and that when introducing the new 'new measures' he himself had told lot owner that 'the OC will authorise the JV to charge the following fee for the services that JV provides ...'.
3. There is also no escaping that as the OC committee Chair and Secretary, Mr Mirabito and Mr Cox had determined that their interpretation of the OC Rules would apply and be implemented by Portsea Village Resort Pty Ltd and that Rule 6.4 would not be enforced and Portsea Village Resort Pty Ltd would no longer issue them key cards as lot owners because they would not pay Portsea Village Resort Pty Ltd the price it wanted to charge them.

EFFECT ON LOT OWNERS BYRON, URSULA & MICHAEL AFTER 1 JULY 2021

1. Byron describes the practical effect on him and the other applicant lot owners of the PVR COMMITTEE DIRECTION and the new measures put in place by the OC committee that had preceded it:[102]
   • ... the immediate and ongoing effect of Mirabito's assertion of such a "DIRECTION", was to preclude Peter Searle from attending Portsea Village Resort to hand key cards to our invitees and guests while the OC continued to breach Rule 6.
   • Ursula Searle, Michael Abell and myself were not prepared to continue paying the OC's extortionate "induction fees" for handing key cards to the owners' invitees, in breach of Rule 6, and Mirabito told us "PVRpl will not be issuing key cards".
   • The OC's new "induction fee" measure, states: "The fee payable is set at 24% of the total rental amount, plus GST, with the following minimum daily fee.....".[103]
2. As to the financial implications for his lot he states:[104]
   • The Owners' end of year 2021-2022 and 2022-2023 Financial Reports show the following nights stayed and total rental amounts between 1 July 2021 and 23 March, 2023:[105]
     1. 2022 nights stayed - 105
     2. 2023 nights stayed - 64
     3. 2022 total rental amount - $36,313.52
     4. 2023 total rental amount - $20,323.37
   • Based on my total rental income from 1 July 2021 until 23 March 2023 of $56,637, my "debt" of invalid "induction fees" "set at 24% of total rental amount" would have been $13,593 plus GST $1,359, a total of $14,952.
   • The purported "induction fees" for issuing key cards to owners' invitees were in addition to the substantial Owners Corporation fees which myself and the other Applicants paid to the OC.
3. In his witness statement, Michael Abell corroborated what Byron said about the practical effect and summarised the financial implications for his lot.
4. Mr Peter Searle compiled the figures for all three applicant lot owners:[106]
   • The Owners' end of year 2021-2022 and 2022-2023 Financial Reports show the following nights stayed and total rental amounts between 1 July 2021 and 23 March, 2023:[107]
     1. 2022 nights stayed - 116
     2. 2022 nights stayed - 111
     3. 2022 nights stayed - 105
     4. 2023 nights stayed - 89
     5. 2023 nights stayed - 59
     6. 2023 nights stayed - 64

1. 2022 total rental amount - $51,480.10
2. 2022 total rental amount - $38,854.88
3. 2022 total rental amount - $36,313.52
4. 2023 total rental amount - $42,347.26
5. 2023 total rental amount - $19,236.37
6. 2023 total rental amount - $20,323.37

• Based on the first three Applicants' total rental income from 1 July, 2021 until 23 March, 2023 of $208,555.50, the invalid "induction fees" "set at 24% of total rental amount" would have been $50,053.32 plus GST $5,005.33, a total of $55,058.65.

1. I accept that evidence.
2. Both also gave evidence that the most important service the OC provided to owners at the reception desk was to provide key cards for owners and their invitees and that as far, as they were aware, the new 'induction fees' were only payable by the applicants and their invitees, and were not imposed on any other owner or paid by any other owner.
3. While that evidence was not challenged, what is most relevant is that the Rules of the OC placed a legal obligation on the OC requiring that the 'Manager' who the OC authorised to control its security key card system and to issue key cards to lot owners and their invitees which gave access to the land in the subdivision do so in accordance with rule 6. What is also relevant is that the key card system itself belonged to the OC, having been purchased by it before Mr Mirabito became Chairman. Mr Mirabito apparently knew that well given the content of the EGM minutes and correspondence written by him over this period.

A. LOT OWNERS' CLAIMS FOR COMPENSATION FROM THE OC

1. Based on these findings I now turn to the applicants' legal claims for compensation made in the amended points of claim dated 2 October 2024.
2. Byron and Ursula Searle and Michael Abell in their capacity as lot owners at the relevant time allege that:

6 The OC owed them each a duty to issue and/or ensure its ... manager issues security key cards to [their] Invitees "Upon arrival to occupy or attend a Lot" in compliance with Rule 6 while it is in effect.

7 In breach of Rule 6 of the OC's Rules, [and] the statutory duty [under s 141 of the OC Act], the OC and or its ... manager ... refused and/or failed to provide security key cards to them and their Invitees "Upon arrival to occupy or attend a Lot".

(1) Since 1 July, 2021, the OC refused or failed to issue security key cards to [them] and their Invitees "Upon arrival to occupy or attend a Lot".

(2) [The OC] purported to authorise "induction fees" on them as lot owners [by]:

...a new measure to be implemented ... that the OC will authorise the JV to charge the following fee for the services that JV provides.

The fee payable is set at 24% of the total rental amount, plus GST, with the following minimum daily fee:

• King Superior Suite $100 for the first day of stay plus $45.00 per stay day thereafter,
• 1 bedroom Apartment $100 for the first day of stay plus $90.00 per stay day thereafter,
• 2Bedroom Apartment $120 for the first day of stay plus $120.00 per stay day thereafter,
• 3 Bedroom Apartment $175 for the first day of stay plus $175.00 per stay day of a stay.

All figures quoted are plus GST and are will be due payable in advance of the stay."

(3) They each paid "induction fees" in amounts of $770, $610 and $1,645 respectively under objection and under duress.

(4) The OC and/or its ... manager ... refused and/or failed to provide security key cards to [them] and their Invitees unless they pay "induction fees" and "security deposit" in advance, and give not less than 48 hours notice.

1. They allege that they have suffered loss and damage by paying 'induction fees' for which they seek reimbursement with interest.
2. Separately, they also allege that they were levied a 'Special Levy (VCAT)' of $849, $849 and $1746 each, 'to fund [the OC] in the proceedings the applicants have issued against it' and seek reimbursement of that too.
3. In their closing submissions orders are sought from the Tribunal that the OC pay:
   • Byron Searle, as owner of lot 107, $1,599 for both 'induction fees' and 'special levy (VCAT)' plus interest according to statute.
   • Ursula Searle, as owner of lot 110, $1,459 for both 'induction fees' and 'special levy (VCAT)' plus interest according to statute.
   • Michael Abell, as owner of lot 211, $3,391 for both 'induction fees' and 'special levy (VCAT)' plus interest according to statute.

Summary of findings on lot owner applicants' claims

1. I accept the three lot owner applicants' claim for refund of induction fees paid under protest together with interest.
   • Byron's evidence which I accept was that:[108]

I have paid ... induction fees of $770 ... in respect of my guests McSherry, DeChamps, Paton, Hick, Umalmi, Smith and Kontouris more than three years ago.[109] [110]

• Michael Abell's evidence which I accept was that:[111]

I have paid ... induction fees of $1,645 ... in respect of my invitees more than three years ago.[112]

• While Ursula did not give evidence, the evidence I have dealt with earlier show that she to paid $610 for induction fees.[113]

1. There was no lawful basis, or reason why, the applicant lot owners should have been compelled to pay an additional fee to be issued the security key cards, whether small or large. In this case the fee unlawfully demanded for that service by the manager at the reception desk for the OC amounted to approximately 24% of the total rental amount for their apartments. The OC Rules already entitled the lot owners of the OC and their Invitees to receive the security key cards as part of their fees levied by the OC, and at no extra cost. The fee demanded by the manager at reception was a price unilaterally charged for the OC's security key cards that allowed access to the land and common property in the subdivision with no legal basis or foundation to support it.
2. I find that the OC breached rule 6 of the OC's Rules by allowing and continuing to authorise rule 6 to be breached in regard to these lot owners under the commercial arrangements the OC and its committee and Chairman and Secretary authorised to be put in place at Portsea Village Resort that gave effective control over the OC's electronic key card system and the issue of security key cards for accessing the common property and land in the subdivision to an external service provider appointed by some lot owners who had entered into a joint venture arrangement to appoint a common booking agent for their benefit only.
3. That arrangement and its authorisation by the OC committee and its Chairman and Secretary which was in breach of the OC's rules, and otherwise had no lawful foundation to be charged under the OC Act, resulted in the three applicant lot owners at the time being unlawfully required to pay for something which rule 6 of the OC's Rules obliged the 'Manager' for the OC to provide lot owners and their Invitees at no additional charge. The OC must therefore compensate them for permitting, enabling and authorising its rules to be breached.
4. As I shall now discuss, other provisions of the OC Act prohibit the charging of a separate fee or charge of lot owners or the public without a special resolution of the members to authorise it, and then only if it was a cost of a 'service' falling within the definition of s 12 of the OC Act. There is no evidence or suggestion that this 'special measure' was incurred or charged as a cost to the OC itself or that a special resolution was passed under s 12 of the OC Act.
5. It is immaterial that the lot owners might have had access to their lots or to the common property attached to their lots through their own hard keys or even individual key cards issued to them individually. The OC's Rules were crystal clear. They required the OC's authorised 'Manager' to issue key cards to lot owners and their Invitees when requested and then for them to be returned at the end of a stay to the 'Manager'. In fulfilling its statutory functions under the Rules, the OC was obligated at all times to act in accordance with their express provisions and evident purpose. It was not permissible for it to purport to authorise the OC's Rules to be thwarted by private arrangements put in place by some lot owners with their own booking manager who controlled access to the OC's key card system.

1. Many arguments were advanced by the OC against a finding that there was a breach of the rules. I reject the OC's submissions.
2. I shall start with the question of the proper construction of the rules of any owners corporation. I also note that s 138(3) of the OC Act makes it plain that 'A rule must be for the purpose of the control, management, administration, use or enjoyment of the common property of a lot' (with sch 1 listing the matters for or with respect to which rules may be made by an owners corporation under s 138(1)). It was always open for the OC to apply to the Tribunal under s 162 and s 163(1)(c) of the OC Act for an order under s 165(1)(f) 'declaring the meaning of a rule of the owners corporation'. The OC did not do that despite there being a clear dispute about the meaning and effect of its rules. As I shall come to, s 141 also makes it clear that an owners corporation and its committee and all lot owners are all bound by the rules of the owners corporation.
3. The rules of an owners corporation, must be construed in conformity with the property rights attached to land in a subdivision affected by an owners corporation and with the statutory functions and duties placed on an owners corporation, and any person delegated its functions under the OC Act.[114]
4. As I have said, s 4(a), (b) and (f) of the OC Act relevantly state that:

An owners corporation has the following functions -

(a) to manage and administer the common property;

(b) to repair and maintain -

(i) the common property;

(ii) the chattels, fixtures, fittings and services related to the common property or its enjoyment;

(iii) equipment and services for which an easement or right exists for the benefit of the land affected by the owners corporation or which are otherwise for the benefit of all or some of the land affected by the owners corporation;

(f) to carry out any other functions conferred on the owners corporation by -

(i) this Act or the regulations under this Act; or

(ii) the Subdivision Act 1988 or the regulations under that Act;

(iii) any other law; or

(iv) the rules of the owners corporation.

An owners corporation is a body corporate which is incorporated by registration of a plan of subdivision or a plan of strata or cluster subdivision. An owners corporation has perpetual succession and is capable of suing and being sued in its own name. See section 28 of the Subdivision Act 1988.

1. Function includes 'duty': s 3.
2. Clear from s 4(f)(iv) is that it is the function and duty of the owners corporation to perform - to 'carry out' - the things set out in its rules.
3. As a statutory entity, the OC like all owners corporations, must also act in good faith. Section 5 of the OC Act provides:

An owners corporation in carrying out its functions and powers -

(a) must act honestly and in good faith; and

(b) must exercise due care and diligence.

1. That statutory duty, while expressed at large, is owed to each lot owner member from time to time and to their tenants as the occupiers of lots in the land subdivision affected by the owners corporation. It relates to each and every 'function' in s 4 and every exercise of 'power' by the owners corporation under s 6 which states:

(a) all the powers conferred on the owners corporation by -

(i) this Act or the regulations; or

(ii) the Subdivision Act 1988 or the regulations under that Act; or

(iii) any other law; or

(iv) the rules of the owners corporation; and

(b) all other powers that are necessary to enable it to perform its functions.

1. These foundational legislative provisions in s 4, 5 and 6 of the OC Act govern all owners corporations in Victoria. They are also the legislative foundations on which other sections in the OC Act are constructed and are to be construed.
2. To enable an owners corporation to exercise and perform its statutory functions and fulfill its statutory duties, an owners corporation may either 'appoint or employ' persons to assist to carry out its functions. This is provided by s 9:

An owners corporation may appoint or employ persons to assist the owners corporation in carrying out its functions.

1. Those 'persons' can be individuals or other incorporated legal entities.[115]
2. Under s 11, authority for the management of the owners corporation rests with the lot owners collectively. They can delegate functions of their owners corporation to their owners corporation committee or manager, or to a lot owner or chairperson or secretary or employee of the owners corporation, to make certain decisions and exercise certain statutory powers of the owners corporation. Thus, s 11(1) and (2) relevantly state: (emphasis added)

11 Management of owners corporation and power to delegate

(1) An owners corporation is to be managed by or under the direction of the lot owners.[116]

(2) Subject to subsection (3), an owners corporation may, by instrument or by resolution at a general meeting, delegate any power or function of the owners corporation to -

(a) the committee of the owners corporation;

(b) the manager of the owners corporation;

(c) a lot owner;

(d) the chairperson of the owners corporation;

(e) the secretary of the owners corporation;

(f) an employee of the owners corporation.

1. By s 11(5) the OC Act provides: (emphasis added)

(5) If no delegation is in force under subsection (2)(a), the committee of the owners corporation is delegated all the powers and functions that may be exercised by the owners corporation, except for -

(a) those powers and functions set out in subsection (3); and

(b) those matters that must be determined at a general meeting under section 82.

1. Part 5 - Committees, deals with the functions and powers of committee. Sections 101 and s 102 permit the committee by instrument to delegate any of its powers and functions to the manager of the owners corporation or a lot owner: s 102(1). The committee may also, by instrument, 'sub-delegate a power or function delegated to the committee to a member of the committee'.
2. The functions of the manager differ depending on whether or not there is a committee.[117]
3. Separate duties are placed on the members of a committee of the owners corporation[118] and on the manager[119] for the owners corporation.[120] They make it very clear that in exercising the functions and powers of the owners corporation they must always align and accord with the statutory 'functions' (including duties) of the owners corporation for the land subdivision.
4. If a person exercising a function or power of the owners corporation causes the owners corporation to breach its statutory duties to a lot owner or tenant or occupier of a lot, or if a person acting as a committee member or in a role of chairperson or secretary or manager of the owners corporation breaches a statutory duty independently imposed on them by the OC Act, the owners corporation is also in breach.[121] The owners corporation has ability to delegate its functions and powers, but the performance or exercise of its functions or powers is always that of the owners corporation.
5. An owners corporation, as an artificial legal entity, necessarily acts through people that it authorises to act for it. Delegation does not absolve the owners corporation, as a statutory legal entity with statutory functions, from liability and responsibility for the exercise its functions or powers (or their failure in performance) by those given the authority to carry out its functions and powers.
6. In Lim v Owners Corporation PS714612M (Owners Corporations) [2018] VCAT 1995 [21]-[22] the Tribunal dealt with a case where an owners corporation had de-activated a security key fob used by subsisting lot owners and occupiers. The Tribunal declared that action by that owners corporation to be invalid. Senior Member Vassie found, and I agree:

21. A fundamental right of any lot owner is the right to have access to the lot. A fundamental right of a tenant of a lot is the right to exclusive possession of the lot, and hence the right to have access to the lot, for as long as the tenancy subsists. Any right of an owners corporation to compel compliance with its rules must yield to those fundamental rights, in my opinion. An owners corporation has no right to prevent a subsisting tenant from access to the tenanted premises merely because the owner or the tenant has been in breach of a rule.

1. In the subsequent case of Cheung v Owners Corporation No 1 501391P (Owners Corporations) [2019] VCAT 598, the Tribunal explained (as I have said earlier) that the shared 'property interest' of all lot owners in the common property for the land subdivision extends to the use of enjoyment of all the common property affected by the owners corporation in accordance with the property rights as tenants in common. Senior Member Vassie found and I agree:

42.The lot owners who are members of the OCs are the beneficial owners, as tenants in common, of the common property in the ... subdivision in shares proportionate to the lot entitlement of their respective lots [ Subdivision Act 1988 s 30]. One begins with the legal position that each lot owner has just as much right as any other to enter upon common property. Any rule that limits a lot owner's right of entry to common property is a limitation to a property right than the lot owner has.

1. Rule 6 was put in place by the OC shortly after the creation of the plan of subdivision for Portsea Village Resort so as to enable that shared right in property to be enjoyed equally by all lot owners.
2. The application and evident purpose of that rule, properly construed, cannot be avoided let alone actively thwarted by the OC committee or by any individual lot owner (or owners) directing persons over whom they hold authority under private commercial arrangements to not apply an owners corporation's rules. Nor, as I shall come to, is it open for them to purport to interpret the rule in a way to deny lot owners the equal right that rule 6 is clearly designed to give each and every lot owner, regardless of whether they book out their lot to an 'Invitee' using one booking agent or another.
3. The responsibility that the owners corporation has for management of the common property for the benefit of all lot owners equally, not just some has been reiterated time and time again by this Tribunal.
4. That was also the purpose of the regulations under the Subdivision Act that were in force immediately before the enactment of the OC Act.[122]
5. This was explained in Owners Corporation PS 501391P v Balcombe [2016] VSC 384 in relation to the 'business' use of lots by lot owners.
6. A business use includes an income generating activity from the ownership of the lot and common property attached to it, such as booking out the lot for holiday or private rental. In that Supreme Court case, Justice Riordan found that the rule itself made by the owners corporation in that case was invalid when it infringed that statutory purpose. He found at [123]-[124]:

[123] In my opinion, the breadth of Rule 34 has caused it to exceed the scope of what was intended by the subdivision legislation and, in particular, the Subdivision (Body Corporate) Regulations 2001 (Vic) for the following reasons:

(a) The subdivision legislation demonstrates that the principal function of a body corporate is to own and manage the common property ...

(b) A review of the development of the strata title legislation demonstrates that it was always intended that unit owners would retain the registered freehold interest in their respective lots.[123] Accordingly, it is fundamentally important that persons are entitled to conduct themselves on their land and buildings as they like, subject to prohibitions created by the common law, such as nuisance, or by legislation, such as planning and environmental regulations. Indeed, there is a presumption, in the interpretation of statutes, against an intention to interfere with vested property rights and such legislation is 'not to be construed as interfering with vested interests unless that intention is manifest'.[124]

(c) ... the appellant's contention is that the Parliament had an intention to provide powers that could substantially inhibit the conduct of lot owners in their own lots. In my opinion, such an intention would need to be expressed in clear language and should not be inferred on the basis of the tenuous arguments of construction available to the appellant in this case.

(d) Any business conducted by a lot owner would be subject to planning legislation. A lot owner would not be permitted to pursue business activities without satisfying all relevant planning obligations. On the appellant's contention, the Parliament has demonstrated an intention that would have, in effect, permitted a body corporate to impose an additional and substantially unappellable control over the use to which lot owners intended to put their privately owned property. I reject this contention for the following reasons:

(i) There is no indication in the legislation or extrinsic material that Parliament intended that a body corporate could, in effect, second guess an owner's proposed use of a lot that was permitted under the planning scheme.

(ii) The fact that the stated intention of the Subdivision Act 1988 (Vic) was that it would incorporate the subdivision and planning processes by the subdivision being approved through the processes outlined in the Planning and Environment Act 1987 (Vic),[125] does not, in my opinion, sit well with inferring a Parliamentary intention that a body corporate would be invested with overriding powers to control the use of the lots on the strata plan.

[124] In summary, I do not consider that the Parliament conferred powers on bodies corporate for the Statutory Purpose[126] of substantially interfering with rights and privileges usually attendant upon freehold owners. To adopt the words of Brennan J, ... '[t]he undiscriminating nature of the regulation certainly reveals that, in many instances, the regulation would apply to [Short-Term Letting] which does nothing to enhance the risk of [conduct problems]; but it also reveals - and this is relevant to validity - that the regulation has been framed without regard to' a body corporate's limited functions and powers under the Subdivision Act 1988 (Vic) and its regulations.[127] Accordingly, I consider that Rule 34 was not sufficiently directly or substantially connected with the Statutory Purpose to be a real exercise of the rule making power.

1. Justice Riordan found the rule itself to be invalid because the legislative power to make the rule did not extend to making one that interfered with the use and enjoyment of property rights attached to lots in the subdivision. A fortiori, any rules validly made by an owners corporation are to be properly construed in the same way for the equal benefit of all lot owners, not just some. Properly construed they do not permit the owners corporation to 'impose an additional and substantially unappellable control' over a lot owner's use and enjoyment of lots and common property.

1. Previously, the OC's statutory power to make rules lay in the Subdivision (Body Corporate) Regulations 1989. Now the power to make and amend rules lies in s 138 of the OC Act, under its Pt 8 - headed 'Rules'.
2. Section 140 of the OC Act provides that a rule is 'of no effect' if it:

(a) is oppressive to, unfairly prejudicial to or unfairly discriminates against, a lot owner or an occupier of a lot; or

(b) is inconsistent with or limits a right or avoids an obligation under -

(ii) the Subdivision Act 1988 ; or

(iv) the regulations under the Subdivision Act 1988 ; or

1. Thus, just as a stream can rise no higher than its legislative source so too the rules of an owners corporation must be properly construed in accordance with that legal principle and consistently with that legislative source of power to make rules.
2. On coming into force the OC Act, 'a subdivision body corporate is deemed to be an owners corporation within the meaning of the Subdivision Act and is deemed to be the same body despite that change'.[128] Any rules of a subdivision body corporate in force immediately before the commencement day of that Act, continue in force on and after that commencement and 'are deemed to be rules of the owners corporation' under the OC Act 'to the extent that they are not inconsistent with the [OC Act] or the regulations' under that Act'. [129]
3. Rule 6 is consistent with the OC Act by conferring an equal right to all lot owners. The OC did not suggest otherwise.

1. In this dispute, in regard to the price purported to be charged as a fee at the reception desk for the issuing of security key cards to lot owners who were not members of the private Rental JV, two other legislative provisions in the OC Act are highly relevant: s 12 and s 13.
2. They are to be read and understood against the background that as the body corporate created by statute, and having various statutory functions that it must perform for the lot owners in the land subdivision, an owners corporation is given the statutory power to levy fees to recoup its costs. Fees levied are not a fee for service but are rather, like a rate, levied under statutory authority against lot owner members, to cover the owners corporation's out of pocket costs of running and administering the owners corporation and managing the common property and services to lots and the common property. I will come to those sections dealing with the levying of fees next.
3. Section 12 and 13, however, also permit an owners corporation to provide other 'services' to members and occupiers and the public if voted on and passed by special resolution of the members, but prohibit an owners corporation from running a business. The policy reason for that is that running a business involves business risk and typically also requires capital contributions from the owners of the business. Those sections state:

12 Provision of services to members and occupiers

(1) An owners corporation, by special resolution, may decide -

(a) to provide a service to lot owners or occupiers of lots or the public; or

(b) to enter into agreements for the provision of services to lot owners or occupiers of lots.

(2) An owners corporation may require a lot owner or occupier to whom a service has been provided to pay for the cost of providing the service to the lot owner or occupier.

(1) An owners corporation must not carry on a business.

(2) An owners corporation may participate in or be a member of another body that carries on a business.

1. The owners corporation might 'provide a service':
   • under s 12(1)(a) through its own employees; or
   • under s 12(1)(b) it might 'enter into agreements for the provision of services' (but only to 'lot owners or occupiers' of lots, not services to the general public),

and recover that 'cost' to the owners corporation from the lot owner or occupier to whom it has provided the service.

1. Under s 12(2), the 'cost of providing the service to the lot owner or occupier' refers to the cost to the owners corporation in providing the service so authorised by special resolution.
2. It does not permit either a price or fee for the service to be charged to lot owners by another service provider. It only permits 'the cost' to the owners corporation to be passed on by the owners corporation to those for whom it has incurred that cost in providing the 'service' authorised by special resolution under s 12(1).

• 397. An owners corporation has no statutory power to authorise a private company to charge a fee directly to a lot owner[130] and s 12 does not authorise any such thing.

1. Thus, the cost that may be passed on directly under s 12(2) is one that:
   • under s 12(1)(a) - is the 'cost' to the owners corporation of providing the services itself directly to 'lot owners, occupiers or the public';
   • under s 12(1)(b) - is the 'cost' to the owners corporation that is charged to it by another person or entity with which the owners corporation has 'entered into an agreement for the provision of services to lot owners or occupiers of lots'.

In either case, if, and only if the owners corporation itself has actually incurred a 'cost' for the 'service' agreed by special resolution of the members to be provided under s 12 may the owners corporation require the lot owner or occupier to whom a service has been provided to pay for that cost incurred by the owners corporation of providing the service to them under s 12(2).

1. In providing such services to 'lot owners or occupiers of lots' of land in the subdivision for which the owners corporation is responsible, it is only the owners corporation that has the power (but not the function) to do that under s 12(1) and to pass on the cost of doing that under s 12(2), not self-selecting lot owners or their private company. And before an owners corporation can lawfully confer on itself that power or do any of these things, its members voting must pass the special resolution authorising it to do such things, including to pass on the cost.[131]
2. That power however is not at large. Under the OC Act, where the owners corporation for the land subdivision has a statutory 'function' to provide a service, the cost of providing the service cannot be recouped from lot owners individually under s 12, and must be recouped as fees levied by the OC.
3. Thus, the Anstat annotation of the OC Act comments at [12.01]: (emphasis in the original)

A "service" that an owners corporation may decide to provide under s 12, cannot be something that, under the Act, the owners corporation must provide, namely, of repairing and maintaining:

• "services related to the common property or its enjoyment" (s 46(b)), or
• "a service in or relating to a lot that is for the benefit of more than one lot and the common property" (s 47(1))

1. The Anstat annotation also mentions the decision of Owners Corporation No 1 PS 511693Q v Sulomar and anor (Owners Corporation) [2012] VCAT 944 in noting that the Tribunal decided that:

Obtaining a right for the owners corporation's members' free use of a golf course was a "service" [under] s 12 and so a special resolution was required before the owners corporation could charge members a fee for obtaining that right,

Paying for recycled water, and the infrastructure for the use of recycled water, for gardening purposes was a "service [under] s 47(1), not a service [under] s 12, and so no special resolution was required before the owners corporation could charge [i.e. levy] members a fee for providing the recycled water and the infrastructure.

1. The point being made in the first paragraph is that 'services' that are to be charged for under s 12 require a special resolution before the owners corporation could charge its members individually (or occupiers) a fee for the 'cost' to the owners corporation of providing that service to them.
2. The point made in the second paragraph is that s 47(1) - which is in Pt 3, Div 5 of the OC Act dealing with 'Asset management' - places a duty on the owners corporation to 'repair and maintain a service in or relating to a lot that is for the benefit of more than one lot and the common property' and that is a 'function' of the owners corporation the cost for which is to be recouped as fees levied (not by way of a 'cost' recoverable directly from separate lot owners).
3. Likewise, s 46 obligates the owners corporation to repair and maintain not just 'the common property' but also 'the chattels, fixtures, fitting and services related to the common property or its enjoyment'.
4. In Energy Technology Australia Pty Ltd v Owners Corporation PS 439401J [2017] VSC 145, Daly AsJ (as her Honour Vice President Daly then was) was not satisfied that a fire alarm system (i.e the capital infrastructure) installed by the OC was a 'service' under s 12,[132] but observed that potentially the provision of fire alarm monitoring for individual lot owners who requested it might be.[133] That case was about a fee levied by the owners corporation rather than a 'cost' for service charged under s 12. Section 12 gives the power to charge a cost, not 'levy' a fee. Thus, the Supreme Court found that it was critical that the owners corporation exercised its powers to levy fees on a proper foundation, holding at [80]:

The resolutions the subject of the VCAT hearing [to levy the fee] were expressed to be made pursuant to s 12 of the Act, and as such, were beyond power.

1. The important point of principle affirmed by that Supreme Court case is that an owners corporation, having itself incurred the cost, can only lawfully recoup it as a cost from lot owners by properly complying with the Act.
2. In this case, the OC's Rules in force at the relevant time provided that the issuing of security key cards to give access to Portsea Village Resort is a service the OC must provide under its rules and not one which it has a discretion whether to provide.
3. At the relevant times there was also nothing in the OC Rules on the proper construction of rule 6 that in any way gave authority to the OC or a 'Manager' given power by the OC to issue the key cards, any power or authority to charge a fee to lot owners for that service.
4. All lot owners are entitled to the benefit of the rules of an owners corporation.
5. The OC had an obligation to lot owners to ensure that the rule in force which was for their equal benefit was being honoured by the manager it had allowed to control the OC's key card system.
6. The fee (or price) demanded by Portsea Village Resort Pty Ltd was one which the OC Rules precluded the applicant lot owners from being charged.
7. And as I shall return to, the lot owners decision in 1992 to regulate the provision of this 'service' under by rules of the OC served another purpose of ensuring that the legislated governance protections which are now contained in the OC Act remained in place for this critical service for lot owners, rather than put in the hands of a private company unilaterally charging prices.
8. While it is unnecessary for me to decide whether the issuing of key cards might be characterised as a 'service' within the meaning of s 12 for which the OC could charge for the 'cost' of providing that service, I doubt it can be given that it is so intimately connected to the use and enjoyment of the individual lots and common property by the lot owners and their Invitees. It is quite different from fire alarm monitoring of individual lots and is more akin to general security services for the land in the subdivision.
9. In Energy Technology Australia Pty Ltd v Owners Corporation PS 439401J [2017] VSC 145, Daly AsJ heard but did not decide upon the submission by the owners corporation in that case that 'the costs recoverable under s 12(2) are not limited to cases where a lot owner has provided consent to the services being provided'. I do not need to decide that question either because in this case the Rules in force at the relevant time are the rules that the members of the OC had put in place to govern that question. The OC was bound by those OC Rules to provide the 'service' in this case to all lot owners and their Invitees in accordance with its rule 6.

1. The OC Act otherwise prohibits an owners corporation levying 'fees' other than in the manner authorised under that Act.
2. Fees and charges 'levied' by an owners corporation to lot owners are not fees for service but are rather - as I have said, like a statutory 'rate' - a fee or charge levied to defray its running costs and outgoings in performing its statutory functions, including under the regulations and its rules.
3. The OC Act states explicitly that a lot owner is not liable to pay or contribute to the funds of the owners corporation 'a proportion of any amount required to discharge the liability of the owners corporation exceeding the lot owner's lot liability', otherwise than as is permitted by the OC Act.[134]
4. While s 12 permits certain 'services' to provided to a lot owner or occupier to be charged by the owners corporation at cost, an owners corporation's costs of performing its statutory 'functions' and duties under the OC Act, regulations and under the rules of the owners corporation must be levied (or otherwise charged) by an owners corporation strictly according to the OC Act.
5. The levies an owners corporation is authorised to raise and charge to its lot owners are variously:

(a) general administration; and > > (b) maintenance and repairs; and > > (c) insurance; and > > (d) other recurrent obligations of the owners corporation

• to be levied based on 'lot liability under s 23(3) (unless s 23(3A) applies);

• under s 23A(1) - for additional fees 'to cover the costs of the premium for reinstatement and replacement insurance' taken out in accordance with Pt 3 Div 6 - to be levied based on 'lot entitlement' under s 23A(2);[135]
• under s 23A(3) - for a separate fee to 'cover the cost of' insurance excess amounts or increased premiums resulting from or attributable to an insurance claim caused by a culpable or wilful act or the gross negligence of a lot owner, their lessee or guest of either, or certain damage to the common property that is caused by a lot owner or a lot owner's lessee, or an excess amount on an insurance claim if the claim solely relates to the lot owner's lot - to be levied as a separate fee against that lot owner for that cost under s 23A(3) ;
• under s 24 - for 'special' fees and charges to cover extraordinary items of expenditure by the owners corporation - to be generally levied on 'lot liability';[136] and
• under s 53 -relating solely to upgrading works for the common property - to be generally levied on 'lot liability'.[137]

1. Under s 49, where an owners corporation undertakes repairs, maintenance or other works to the common property or to a lot (under its statutory powers to do that), it also has the statutory power to recover as a debt, 'the cost of repairs, maintenance or other works carried out wholly or substantially for the benefit of one or some, but not all, of the lots affected by the owners corporation', from those 'one or some' lot owners.[138] But this relates only to its costs incurred for 'repairs, maintenance or other works' 'to the common property or a lot'. It does not apply to recouping costs of 'functions' or other recurrent obligations that fall under s 23(1)(a) - (d) for managing the owners corporation and common property in performing its functions in compliance with the OC Act and regulations and under the rules of the owners corporation.
2. The owners for the time being and any purchaser in possession of a lot, and any person entitled to receive the rents and profits from a lot, 'are liable to pay any outstanding fees, charge, contribution or amount owing to the owners corporation in respect of that lot'.[139] Unpaid money owing to it can be recovered by an owners corporation by action to recover them as a 'debt', in accordance with the OC Act.[140]
3. The price being demanded by Portsea Village Resort Pty Ltd that Mr Mirabito as OC committee Chairman and Mr Cox as Secretary, purported to authorise as 'new measures' that could be charged by it to lot owners, finds no authority in these sections.
4. Accordingly, the directions and authority given to Portsea Village Resort Pty Ltd to charge a fee to the applicant lot owners was in breach of the OC's rule 6. Persons exercising functions of the owners corporation must comply with its rules. They cannot avoid the rules of an owners corporation by directing a third person to do something that is inconsistent the statutory functions and duties of the owners corporation under its rules as the body corporate for lot owners in a plan of subdivision.

OWNERS CORPORATIONS REGULATIONS 2018

1. In addition to the OC Act, the regulations made under it impose other statutory requirements on an owners corporation.
2. They reinforce the views that I have expressed.
3. I simply note one obligation that makes it clear that the OC must properly authorise all fees and charges in relation to the use and enjoyment of common property and must comply with its rules as statutory body corporate.
4. Under the regulations an owners corporation must give to any person applying for it (and paying the fee) an 'owners corporation certificate' containing prescribed information under s 151(4)(a) of the OC Act. This is an important protection for persons holding or taking interests in Victorian land affected by an owners corporation. When the certificate is provided it must contain the prescribed information and be accompanied not only by the rules in force but also (amongst other things) by and a statement of advice and information in prescribed form for lot owners and prospective purchasers.[141]
5. The relevant prescribed information in reg 16 relevantly states:[142]
   1. Prescribed information for owners corporation certificate

For the purposes of section 151(4)(a) of the Act, the prescribed information is the following -

(a) the current fees for the lot for each quarter or annually or other period;

(b) the date up to which the fees for the lot have been paid;

(c) _the total of any unpaid fees or charges for the lo_t;

(d) any special fees or levies which have been struck, and the dates on which they were struck and are payable;

(e) any repairs, maintenance or other work which has been or is about to be performed which may incur additional charges to those set out in paragraphs (a) to (d);

(f) in relation to the owners corporation's insurance cover -

(g) if the owners corporation has resolved that the members may arrange their own insurance under section 63 of the Act, the date of this resolution;

(h) the total funds held by the owners corporation;

(i) whether the owners corporation has any liabilities (in addition to any such liabilities specified in paragraphs (a) to (d)) and, if so, the details of those liabilities;

(j) details of any current contracts, leases, licences or agreements affecting the common property;

(k) details of any current agreements to provide services to lot owners, occupiers or the public;

(l) details of any notices or orders served on the owners corporation in the last 12 months that have not been satisfied;

(m) details of any legal proceedings to which the owners corporation is a party and any circumstances of which the owners corporation is aware that are likely to give rise to proceedings;

(n) whether the owners corporation has appointed, or has resolved to appoint, a manager and, if so, the name and address of the manager;

(o) whether an administrator has been appointed for the owners corporation, or whether there has been a proposal for the appointment of an administrator;

(p) the minutes of the most recent annual general meeting of the owners corporation.

1. Regulation 17 prescribes the statement of advice which is set out in sch 3 as follows:

information for prospective purchasers and lot owners

The lot you are considering buying is part of an owners corporation. Whenever a plan of subdivision creates common property, an owners corporation is responsible for managing the common property. A purchaser of a lot that is part of an owners corporation automatically becomes a member of the owners corporation when the transfer of that lot to the purchaser has been registered with Land Use Victoria.

If you buy into an owners corporation, you will be purchasing not only the individual property, but also ownership of, and the right to use, the common property as set out in the plan of subdivision. This common property may include driveways, stairs, paths, passages, lifts, lobbies, common garden areas and other facilities set up for use by owners and occupiers. In order to identify the boundary between the individual lot you are purchasing (for which the owner is solely responsible) and the common property (for which all members of the owners corporation are responsible), you should closely inspect the plan of subdivision.

How are decisions made by an owners corporation?

As an owner you will be required to make financial contributions to the owners corporation, in particular for the repair, maintenance and management of the common property. Decisions as to the management of this common property will be the subject of collective decision making. Decisions as to these financial contributions, which may involve significant expenditure, will be decided by a vote.

The owners corporation rules may deal with matters such as car parking, noise, pets, the appearance or use of lots, behaviour of owners, occupiers or guests and grievance procedures. You should look at the owners corporation rules to consider any restrictions imposed by the rules.

The plan of subdivision will also show your lot entitlement and lot liability. Lot liability represents the share of owners corporation expenses that each lot owner is required to pay. Lot entitlement is an owner's share of ownership of the common property, which determines voting rights. You should make sure that the allocation of lot liability and entitlement for the lot you are considering buying seems fair and reasonable.

1. These statutory instruments reiterate that the OC is confined in its powers and that in addition to the fees levied it must maintain as part of its records not only details of contracts, leases and licences or agreements affecting the common property but any agreements it has made to provide services to lot owners, occupiers or the public. And as the Statement of advice in Sch 3 clearly states, as a 'member' of the owners corporation:

Decisions as to the management of this common property will be the subject of collective decision making. Decisions as to these financial contributions, which may involve significant expenditure, will be decided by a vote.

The plan of subdivision will also show your lot entitlement and lot liability. Lot liability represents the share of owners corporation expenses that each lot owner is required to pay

RULES FOR BODY CORPORATE PLAN NO 302397L - RULE 6

1. One of the arguments of construction put by the OC and seemingly on which Mr Mirabito justified his interpretation of the OC Rules at the time was that Portsea Village Resort Pty Ltd was not the 'Manager' within the meaning of the Rules because, so he asserted, it had not been appointed by the OC as the manager for the owners corporation itself.
2. I reject that argument both on the proper construction of the OC Rules in force and as to the substantive legal obligation on the OC to comply with its rules in force.
3. Rule 6 of the OC Rules, which I have set out earlier, is one of 7 short rules made in January 1992 styled 'Portsea Village Rules'.[143]
4. The OC's Rules are dated 29 January 1992 and are the original 'Special rules' adopted by the body corporate pursuant to Reg 407 of the Subdivision (Body Corporate) Regulations 1989. During the events in question in this dispute they had not been updated after the coming into effect of the OC Act (and were only amended by the OC in late 2022).
5. That they preceded the introduction of the OC Act is relevant to what they meant at the time they were adopted. Their meaning might need to be adapted to the new regulatory framework that governs owners corporations after the OC Act came into force, but their prevailing original meaning does not necessarily change. Only if now inconsistent with the OC Act and regulations are old 'inconsistent' rules to be read down or inapplicable to that extent.[144]
6. The Notes at the commencement of the OC's Rules record:

The Regulations provide for the powers of the Body Corporate, the general duties of members, meetings and administration of the Body Corporate, insurance and other miscellaneous matters. These rules must be read in conjunction with the Regulations. A copy of the Regulations is contained in Schedule 1 to these rules.

Pursuant to the requirements of clause 2.20 of the Flinders Planning Scheme the Body Corporate has entered into an agreement with the Shire of Flinders under section 173 of the Planning and Environment Act 1987. That agreement imposes certain obligations on the Body Corporate regarding maintenance of the common property. Those obligations are incorporated into these rules. A copy of the section 173 agreement comprises Schedule 2 to these rules.

1. In the OC's Rules the term 'Manager' is defined to mean as follows:

"Manager" means the managing agent Appointed by the Body Corporate pursuant to Regulation 616 of the Subdivision (Body Corporate) Regulations 1989.

1. Other relevant definitions in the OC's Rules are:

"Agreement" means the agreement pursuant to section 173 of the Planning and Environment Act between the Body Corporate and the Shire of Flinders which comprises Schedule 2 to these rules.

"Committee" means the committee elected by the Body Corporate pursuant to Regulation 613 of the Subdivision (Body Corporate) Regulations 1989;

"Common Property" means the common property shown on Plan No. 302397L;

"Portsea Village" means land affected by the Body Corporate being Lots 1 to 31 inclusive and the Common Property.

1. In addition to rule 6, the OC's Rules also impose rules concerning:
   • the use of lots (rule 2),
   • the use of common property (rule 3),

• nuisance (rule 5); and
• body corporate fees (rule 7).

1. While the OC Rules must now be construed in conformity with the statutory requirements of the OC Act which now govern the statutory 'functions' of the OC, their meaning must also take into account the meaning they originally had, which has not relevantly changed when it used words like 'manager'.
2. It is clear from the OC's Rules, that the notion 'manager' embraced what the OC Act now describes as a 'manager for the owners corporation' who is delegated any power or function of the owners corporation (see s 11(2)(b)).
3. It is also clear that it also embraced any 'manager':
   • appointed as 'managing agent' to act for the OC under statutory delegation; or
   • acting as 'agent' of the body corporate as a legal entity.
4. This was also how it was expressed in reg 616, which at the time the OC Rules were adopted expressly conceived of a manager acting for the body corporate for the land in the plan of subdivision in the simple language of 'agency':

(1) The body corporate may appoint a managing agent.

Appointed as managing agent, the manager acted 'on behalf of the body corporate'.[146]

1. At that time, the responsibility the managing agent could be given by the body corporate for the subdivision to assist it to carry out its functions was not prescriptive. This was clear from Form 5 to those regulations. The appointment of the managing agent under reg 616 contemplated that Form 5 could be modified by an owners corporation to state one or more of a range of different 'functions' for the managing agent to perform in accordance with the then regulations, by providing: (emphasis added)

The above body corporate hereby appoints to act as managing agent.

The managing agent has the following delegated functions:

*(b) to issue all Body Corporate certificates and retain any fee paid;

*(c) to operate a trust account for or on account of or in the name of the body corporate, to maintain all books of account including separate records for each body corporate where a trust account not in the name of the body corporate is established and prepare any statements of income and expenditure, to submit a report to the annual general meeting, to convene the annual general meeting, to maintain insurance policies and process all claims from members of the body corporate;

The fee to be charged by the managing agent shall be (insert details or refer to any recognised fee structure). (Insert any other provisions).

1. Given this original statutory context of the OC's Rules, the word 'Manager' embraced an 'agent' authorised by the OC to perform the identified or any 'other' delegated functions on behalf of the OC. Thus, when the OC's Rules charge the 'Manager' with the responsibility to issue the security key cards to lot owners or their Invitees to access the common property and a lot owner's lot, they clearly contemplated any 'manager' authorised by the OC to act as its agent to perform that function on behalf of the OC. Whether that manager also performed other functions for the OC was irrelevant.
2. Thus, whether or not Portsea Village Resort Pty Ltd is what the OC Act now calls the 'manager of the owners corporation' in s 11, the important point of construction is that the OC's Rules in force at all times during the events in question required the OC to have arrangements in place for a 'Manager' to perform the function of the OC to hand out the security key cards to lot owners and Invitees.
3. In their joint email to the lot owner applicants dated 26 October 2021, Mr Mirabito and Mr Cox sought to interpret rule 6 as being satisfied by the issuing of permanent keys. That construction is simply fanciful if not artificially contrived.
4. Mr Mirabito himself accepted in his evidence to the Tribunal that security key cards and cut keys are different things. During the hearing he produced his own keys to show me. The construction proffered to members who had joined the Rental JV to attempt to avoid the operation of rule 6 that bound the OC at the time did not accord with the proper construction of the OC's Rules. For the OC committee Chairman and Secretary to assert that a rule will 'naturally not be enforced' does not help the OC avoid its proper construction. Nor can the statutory rules of an owners corporation be circumvented by private commercial arrangements made between some lot owners acting in their own interests.
5. Rule 6 is headed in plain English for the lot owners:

That is what the rule is about. Nothing could be clearer.

1. Its first rule imposes an obligation on the OC that:

6.1 All security key cards to the Common Property or any Lot are to be Issued by the Manager.

1. It is referring explicitly to security key cards not lot owners' cut keys. Thus Rule 6.3, states and requires that:

6.3 Upon registration under rule 6.2 the Manager will issue security key cards to however many occupants of a Lot as the Manager thinks fit.

1. The discretion that the 'Manager' has under rule 6.3 is not at large. It is a discretion under a statutory rule of the body corporate for whom it is performing functions of the OC that must be exercised in the interests of lot owners for their invitees depending on how many 'occupants' might be booking the room. Clearly the Manager cannot issue no security key cards to an Invitee who registers at reception. The 'thinks fit' discretion in rule 6.3 is to do with the practical question of whether 2 or more key cards might be necessary if there are 2 or more 'short term occupants' registering to use a lot.
2. That is plainly evident from the immediately preceding rule 6.2 that states:

6.2 Upon arrival to occupy or attend a Lot a Member or Member's Invitees[147] must register with the Manager and provide details regarding the number of people occupying the relevant Lot and the expected duration of the occupation

• 455. Thus, rule 6 of the OC Rules required 'security key cards' to be 'issued' by the Manager to an Invitee of a lot owner who registers with the Manager at reception on arrival. It is the lot owner or guest who does the registering on arrival and tells the Manager how many people are staying and for how long.[148] If guests are coming and going, during the 'expected duration' that could also be a relevant consideration that might require an additional key card.

1. Statutory rules are to be interpreted consistently with their express words and evident purpose. Rule 6.3 creates an obligation - 'will issue' - to give security key cards to Invitees who register. The Manager's discretion is simply over how many. It is a 'function' of the OC that must be exercised on behalf of the OC in accordance with the statutory duties placed upon it as an owners corporation.
2. That discretion is not some contractual or commercial choice to be made by the service provider engaged under the authority of the OC at the reception desk but a duty to be performed under the statutory rules of the body corporate. It is a duty that the OC must comply with, unless and until it validly revokes the rule and puts in place some other lawful arrangement for the exercise of its functions.
3. That duty imposed by the rules of the OC is for the benefit of all lot owners. It does not create an unfettered let alone private discretion. It must be exercised by the person authorised by the OC to perform that function on behalf of the OC in the interests of the lot owner and for their Invitee, and not to benefit not some of the other lot owners under commercial arrangements they might have made with a private joint venture company.

• 459. That power cannot be exercised for an improper purpose of benefiting a service provider company or trust or its shareholders or unitholders. [149]

1. Thus, properly construed, the conduct of the OC acting through its committee breached rule 6.
2. Through its committee Chairman and Secretary it directed and permitted this important function of the OC, one for the benefit of all lot owners, to be performed by those it had allowed to control the issuing of security key cards for the lots and common property to the disadvantage of the applicant lot owners who had engaged their own service provider, as their booking agent to lawfully assist their guests, and to unlawfully charge them a fee that was not authorised by the rules or by the OC Act.
3. Whether viewed as Portsea Village Resort Pty Ltd charging the fees as 'agent' for the OC or as 'Manager' within the meaning of the OC Rules or otherwise, it was doing it with the express authority of the OC committee and its Chairman and Secretary and in breach of the OC Rules. In this case, the 'induction fee' being charged by Portsea Village Resort Pty Ltd to its putative customers at the reception desk at Portsea Village Resort, was never a 'cost' to the OC itself that might have been passed on under s 12(2). No assertion was made by the OC (or evidence produced) that such a fee was ever charged to it as a 'cost' and no evidence was produced of the 'cost' to the OC of providing the service to the applicant lot owners, or to any lot owners. The evidence went the other way to show that it was an attempt by a private 'joint venture' company to gain revenue from those lot owners who did not use its booking services.
4. The owners corporation, as a legal entity managed by or under the direction of the lot owners, acts either through its own employees, or its appointed manager, or through its committee (and its subcommittees) or through nominated lot owners or officers, such as the chairperson or secretary, as permitted by s 11(2).
5. Section 141 of the OC Act, states that the rules of an owners corporation are 'binding on':

(a) the owners corporation;

(b) the lot owners;

(c) any lessee or sub-lessee of a lot; and

(d) any occupier of a lot,

in the plan of subdivision affected by the owners corporation.

1. In s 141, the reference to 'lot owners' refers to them in their capacity as individual lot owners, and when acting as members of committees and subcommittees of the owners corporation. Section 128 also places a distinct obligation on a lot owner to 'comply' with the rules of an owners corporation as well as the OC Act and regulations. In that section it is expressed, albeit in the heading of Part 7, as a 'duty' of lot owners.
2. The OC and its committee - and in particular its Chairman and Secretary, Mr Mirabito and Mr Cox - incorrectly and improperly treated rule 6 as having been somehow made legally redundant under the private commercial arrangements that had been put in place for the lot owners who elected to join the new 'rental JV'.
3. But rule 6 was not legally redundant. It was not revoked by the OC until late 2022 when the OC voted to amend the rule.

• 468. Wearing the two hats as the OC committee Chairman and director of the rental JV company, Portsea Village Resort Pty Ltd, which he founded and controlled as director and sole shareholder, Mr Mirabito had a clear conflict of interest.[150] So too did Mr Cox, as OC committee Secretary and secretary of Portsea Village Resort Pty Ltd.

1. Mr Mirabito wearing his OC committee Chairman's hat impermissibly and unlawfully treated the rental JV arrangements - which had put the rental JV company Portsea Village Resort Pty Ltd in control of the management of reception and of access to the common property belonging to the lot owners through the issuing of key cards to lot owners and their Invitees - as somehow legitimising and authorising that private service providing company to charge a lot owner for a service in relation to the land affected by the OC that were not obliged by law to pay and which the OC Rules and the OC Act did not authorise and prohibited.
2. All of these arrangements had been allowed to be put in place by the OC committee, chaired by Mr Mirabito on which Mr Cox was the secretary. Mr Cox while possibly not the primary moving force, nevertheless endorsed this approach in the email he allowed Mr Mirabito to send with his name at the bottom on 26 October 2021 to Byron, Ursula and Michael Abell.
3. Just as an owners corporation cannot, under rule making powers conferred on it by legislation for the statutory purposes, pass rules that 'substantially interfere with rights and privileges usually attendant upon freehold owners' (to use Justice Riordan's expression), neither can it avoid the obligations imposed on it by its validly 'passed' rules by having its committee set up private arrangements with some lot owners that cause its rules to be breached.
4. I was told at the hearing that there were other lot owners who do not rent out their apartments, but it was not made clear to the Tribunal which lot owners had joined the Rental JV and which had not. For them, like Byron and Ursula and Michael, it was perfectly open to them as a lot owner in the land subdivision affected by the OC as the body corporate for all its lot owner members not to use the new joint venture company and to rely on the legal rights and attendant benefits conferred on them as lot owners under the rules of the OC to which they paid fees levied for managing the common property and services to land affected by the OC as the statutory owners corporation for the subdivision of land in Plan No 302397L.
5. That is an important property right that cannot be lightly taken away in my view. Why should a lot owner necessarily want to have their rental money under the control of a private company acting outside the regulatory environment of the OC Act whom they have not voluntarily appointed? People are entitled to entrust their financial affairs to the companies and individuals they have trust in. Under the OC Act, no lot owner can be compelled to become part of an unregulated joint venture to manage the land and common property affected by an owners corporation.
6. Despite the many points made by the OC in its closing submissions, the resolution of this case according to law ultimately reduces to a simple question of construction of the rules of the OC in force at the time and the obligation of an owners corporation to discharge its functions in accordance with its rules in force.
7. Evident from the minutes of committee meeting and clearly displayed by the correspondence from Mr Mirabito as the committee Chairman, the OC authorised, directed and allowed the conduct of Portsea Village Pty Ltd and its staff to cause rule 6 to be breached as affecting the applicant lot owner's and their tenant's or guest's as 'Invitees' to Portsea Village.
8. I find therefore that:
   • Through Mr Mirabito's actions and express directions acting as committee Chairman and the actions or acquiescence in that conduct of its committee Secretary Mr Cox, the OC breached rule 6. Having given Portsea Village Resort Pty Ltd control over the OC's security key card system that the OC had bought to ensure the proper and secure use and enjoyment of the common property and land in the plan of subdivision affected by the OC and of services to the lots - which are all statutory 'functions' of the OC under the OC Act to be carried out in compliance with the OC rules - the OC committee authorised the misuse of that system and the charging of unlawful fees and the imposition of unlawful conditions that breached rule 6 of the OC's Rules. The explicit authorisation given to Portsea Village Resort Pty Ltd to demand and compel an unlawful supposed 'fee for service' on lot owners, to which the applicant lot owners did not consent and were compelled to pay under protest or duress during the period claimed, was a clear breach of rule 6.
9. Not all committee members were called to give evidence as witnesses, and so in fairness to them as lot owners I make the following findings. I find on the evidence that:
   • Mr Mirabito acting in his capacity as committee Chairman for the OC caused the OC to breach its Rules. That he might have also been authorising the Rental JV - whose trustee company he also controlled as director and sole shareholder - to do that underscores the point that he was directing and authorising it and its staff to breach rule 6 by forcing the applicant lot owners to pay that private company an unlawful fee for 'service' in connection with the land in the subdivision affected by the OC.
   • Mr Cox also participated in that unlawful conduct by the OC as committee Secretary. He allowed his name to be used by Mr Mirabito in purporting to sanction these unlawful actions on behalf of the OC. As the OC committee Secretary, at the very least, he needed to let other lot owners and committee members of the OC know if he disagreed with what Mr Mirabito was saying and doing under his name, but did not do that.
   • There was little evidence of what the other OC committee members' involvement was. I make no personal finding against any of them other than that the appeared from the evidence presented by their OC to have acquiesced and appeared not to have intervened to try to stop or reverse this conduct occurring at the time. There did not appear to be a committee resolution about the 'new measures' but there was clearly some discussion. The sense I also got was that during the lead up to this period during the COVID-19 pandemic - from well before the 2021 mediation that led to the change in control of management of Portsea Village Resort - was that Mr Mirabito had engaged in a battle for the hearts and minds of the lot owners, some of whom I was told are elderly. I am prepared to accept that many, if not most lot owners including those serving in lesser committee roles, were acting on the assumption that what Mr Mirabito was telling them in his emails and discussions was truthful and that it was also authorised by law. Powerful personalities can sometimes overbear on human behaviour and for many lot owners at the time, finding out the truth of what was going on on the ground at that time, might have been very difficult.
10. Mr Mirabito and those working alongside him and assisting him to create the Rental JV under its new corporate and trust structure (whoever they might have been) had not been acting under any special resolution of the OC that even purported to authorise these arrangements as a fee for service to lot owners and their Invitees.
11. This lack of authorisation by any special resolution by the OC is evident from the minutes of the 21 June 2021 OC committee meeting in which the earlier 'General Discussion Notes (Held Prior to EGM)' from the 6 June 2021 EGM of the OC held the fortnight before morphed into an ordinary resolutions of its committee.
12. Not only had there only been one single resolution put to lot owner members of the OC to vote on at the 6 June 2021 EGM (which was simply to approve the Terms of Settlement), there was also nothing recorded by that minute of 'general discussion' preceding that motion to suggest that there was an agreement reached that the as then described 'rental JV' would be given any licence of common property or control of the OC's security key card system let alone charge lot owners additional fees for the service that the OC's Rules secured for them from their OC in accordance with rule 6.
13. Even had the 'new measure' been sought to be imposed by the OC under s 12 of the OC Act as a 'cost' to the OC (which it was not), as I have said, that section contains a clear statutory requirement: there must be a motion put and passed by special resolution of the members of the OC. In this case, there has been no special resolution of the OC passed under s 12 to either:

(a) provide a 'service' to lot owners or occupiers of lots or the public; or

(b) for the OC enter into agreements for the provision of 'services' to lot owners or occupiers of lots.

Nor was there any special resolution for the OC to charge the cost to lot owners on a user pay basis. In any event, if such a resolution had been put, while rule 6 was in force it would have been inconsistent with rule 6 which did not authorise a fee for service to be charged and clearly contemplated that this service provided by the OC to lot owners in the land subdivision was part of the annual fees levied by their statutory owners corporation based on lot liability.

1. It is not an issue before the Tribunal as to whether a resolution under s 12 of the OC Act can treat different lot owners differently depending on their private contractual arrangements or shares or interests in a private company or trust, but I do express serious reservations whether that is lawful under the OC Act, which is very precise about what is and what is not permitted be charged for services in connection with the land in a subdivision affected by an owners corporation in Victoria. To fly in the face of the statutory policy of the OC Act that lot owners have equal rights to the use and enjoyment of the common property and services to land by singling lot owners out for unequal treatment, or to create conditions under the arrangements put in place by an owners corporation for the use and enjoyment of land ownership interests in a subdivision affected by it, is to do the very sort of thing that Justice Riordan said cannot be done under the rules of an owners corporation and to create an unregulated and 'substantially unappellable' environment in which the statutory functions and responsibilities of the owners corporation are to be carried out.

• 483. As affecting the determination of the issues that are before the Tribunal to resolve according to law on the evidence in this case between the parties to this case, I find that the Rental JV vehicle - namely Portsea Village Resort Pty Ltd - in providing its services at Portsea Village Resort was acting for the exclusive benefit of the unit holder members of the OC who elected to join that joint venture. The service fee it sought to charge the applicant lot owners was not for a 'service' provided by the OC but a unilateral price set and unlawfully purported to be charged by that privately owned company to the lot owners directly and is unauthorised by s 12(1)(a). The OC had not entered into agreements between itself and that private company for the provision of those services to lot owners or occupiers and so the fee it unlawfully purported to charge is unauthorised by s 12(1)(b)). The OC was never charged a fee by Portsea Village Resort Pty Ltd and so has never had a 'cost' to pass on to the lot owner applicants under s 12(2). An owners corporation otherwise has no statutory power to authorise a private company to charge a fee directly to a lot owner.[151]

1. While it is not in any way determinative, when the OC was formed as a body corporate for the land subdivision, those charged with preparing its original rules saw it prudent to put the ability of guests booking lot owners' lots to securely access the common property making up the Portsea Village Resort, in the OC's rules as a 'service' to be provided by the OC through the manager it appointed. In that way, the manager was responsible to the OC (controlled by the lot owners) and provided services to the members of the OC collectively, it as its managing agent. In that way, consistently with the statutory functions of a body corporate created for a land subdivision, the lot owners as members of the OC in general meeting could vote together on whether any additional fees or charges could be imposed by their owners corporation. That would enable all decision making on this important question affecting the use and enjoyment of their interests in land to be made by all the lot owners collectively as 'members' of the OC in general meeting, governed by the requirements of the legislation for conducting meetings and passing special resolutions of the body corporate having statutory responsibilities and governed by duties.
2. I simply observe that those statutory legal and procedural safeguards for all lot owners exist for a purpose. They safeguard the proper governance of an owners corporation as a statutory body corporate with statutory functions and statutory powers to manage the land subdivision and services to it, with statutory powers to make rules, levy fees and pass on costs for additional services.
3. The conduct of the OC committee and its Chairman and Secretary in authorising the conduct by Portsea Village Resort Pty Ltd finds no authority in the OC Act. To use Justice Riordan words again, their authorisations were given on behalf of the OC without regard to 'a body corporate's limited functions and powers under the Subdivision Act 1988 (Vic)' and now the OC Act, and unlawfully allowed an unregulated 'additional and substantially unappellable' impost to be imposed on lot owners through the charging of unilateral fees for service by a private company.
4. Mr Peter Searle, acting as letting agent for the lot owner applicants, warned Mr Mirabito and Mr Cox as the OC Committee Chairman and Secretary about this when defending the allegations that Mr Mirabito had broadcast against him in his 'PVR COMMITTEE DIRECTION'. In the second part of his email on Monday, 25 October 2021, Mr Peter Searle wrote in unequivocal terms:

I confirm that some members propose to lodge formal complaints against the OC, which will include the following grounds of complaint, unless rectified within 7 days -

1. The OC Chairman and Doug Cox have a conflict of interest by acting as directors of PVR P/L, as well as Chairman and committee member of the OC respectively.

2. The OC has entered into licenses for the common property without special resolutions as required under the OC Act, and without providing copies of the licenses to all Members.

3. In the absence of copies of the licenses and agreements between the OC and PVR P/L and others, Members are unaware of any limitations those purported licenses and agreements may place on their rights as tenants in common of the common property.

4. The OC has authorised "induction fees" on Members which it has no power to authorise. Members have paid those induction fees under objection and under duress.

1. At the time, Mr Mirabito had lawyers acting who had assisted in setting up the Rental JV. In discharging his functions as committee Chairman he had a duty to act on behalf of the OC for all its lot owners, not just a subset of owners who might want to join the Rental JV. The evidence clearly establishes that Byron, Ursula and Michael, as individual lot owners, did not want to join the Rental JV. The evidence also clearly shows that they were telling - and through Mr Peter Searle 'warning' - the OC of the unlawfulness of the new measures and that the OC had no power to authorise them.
2. And as Chairman of the OC committee, Mr Mirabito simply ignored their legitimate and legally correct complaint, and instead ignored his obligations and those of the OC to all lot owners, emailing them collectively on Tuesday, 26 October 2021:

Subject: FW: Byron, Ursula and Michael's Apartments

As a result of your failure to accept the terms and conditions for the services provided by PVRpl, all services to apartments 107, 110 and 211 will cease immediately. ...

Further, the Owners Corporation has advised PVRpl (the Manager appointed by the OC) that PVR Owners have been issued with permanent cut keys and as such has determined that the issuing of the cut keys satisfies point 6.1 and 6.3 of the OC rules...

1. That, and the OC committee's actions that preceded it, breached the statutory obligation placed on the OC under s 141 of the OC Act to comply with the OC Rules by which it and it is committee and lot owners exercising its functions and powers are legally bound. It was in breach of the express terms of rule 6.

1. The arguments that Mr Mirabito made at the time and in his evidence and that the OC made in submissions to justify the lawfulness of the fee being charged to the applicant lot owners by Portsea Village Resort Pty Ltd, contained subtle variations and twists of argument. A separate argument based on the 'ownership' of the Rental JV's trustee company by the OC was also advanced by the applicants to establish liability on the OC for breach of its rules and statutory duty under s 141 of the OC Act through that entity. I now deal with these other arguments as briefly as possible.

Argument that Portsea Village Pty Ltd is not the OC manager so not bound by the OC Rules

1. In his evidence to the Tribunal, as I have mentioned, Mr Mirabito said that Portsea Village Resort Pty Ltd was not appointed as the 'manager of the OC'. He relied on that in his evidence to justify the view he purported to hold that it was not acting for the OC (despite what he had said at the time in his emails). He said in his evidence that there was no appointed manager of the OC, just the committee.
2. If it were the case that Portsea Village Resort Pty Ltd was not, in fact, the manager for the OC at the time (and it is unnecessary to reach a view on that), what flows from that is that unless every decision by the OC was being taken by resolution of the members of the OC (of which there is no evidence or suggestion), then the 'functions' of the OC under s 11 were being performed at this time by either:

(c) a volunteer manager of the owners corporation;

(d) a lot owner;

(e) the chairperson of the owners corporation;

(f) the secretary of the owners corporation;

(g) an employee of the owners corporation.

1. As I have noted, s 11(5) of the OC Act states that if there is no actual delegation to the committee under s 11(2)(a), then per force of s 11(5) the committee of the OC 'is delegated' all of the powers and functions of the OC except for those in s 11(1) or those matters that must be determined at general meeting under s 82. Thus, s 101 states that subject to the rules of the owners corporation 'a committee has all the powers and functions that are to it by or under section 11'.
2. In this case, what is clear from the evidence is that the functions of the OC under the OC Act and the OC's Rules, were being carried out by the committee directly and by its Chairman and Secretary acting with its express permission or knowing acquiescence. Thus, the actions it and its members authorised Portsea Village Resort Pty Ltd to engage in by refusing to issue key cards at reception unless the price demanded for its services was paid by the applicant lot owners and unless registrations were made with prior notice given - when rule 6 permitted registration on arrival - were actions on behalf of the OC and breaches of rule 6 committed by the OC in that manner.

Argument that Portsea Village Pty Ltd was an independent actor

1. In his evidence Mr Mirabito also to asserted that his emails sent to lot owners or staff at Portsea Village Resort Pty Ltd copying in the applicants and others - which he sometimes signed with different email footers or sent from his different email addresses - were intended by him show the reader the different hats he was wearing as either the OC committee Chairman or Portsea Village Pty Ltd director as the company under his control, and that this somehow made a difference.
2. I find that after the fact and self-serving explanation, which was inconsistent with the actual content of his emails - sometimes speaking for the OC as OC committee Chairman and sometimes for Rental JV - to be utter nonsense. It was simply made up by him to suit his tune. It was the stuff of children's literature:

"When I use a word," Humpty Dumpty said in rather a scornful tone, "it means just what I choose it to mean - neither more nor less."

The question is," said Alice, "whether you can make words mean so many different things."

"The question is," said Humpty Dumpty, "which is to be master - that's all."

1. What Mr Mirabito might have subjectively thought (or understood to be the legal position) is also irrelevant. However he styled or addressed his emails, he was always the OC committee Chairman.
2. What occurred in fact was that the OC allowed its committee to put the new management arrangements for Portsea Village Resort in place from 1 July 2021 without passing a resolution to circumscribe or direct the committee's authority.
3. After the Rental JV was then put it place, the committee, through its Chairman and Secretary, breached rule 6 by putting in place the new measures and authorising Portsea Village Resort Pty Ltd to charge its prices to lot owners who were not members of the new Rental JV. No case was put by the OC to suggest that Mr Mirabito or Mr Cox were acting outside of that authority. In any event, it is now not open for the OC to deny the authority that it gave to its own committee to avoid its statutory obligation to comply with its own rules, which always remained in force.

Is Portsea Village Resort Pty Ltd the OC manager?

1. It is unnecessary for me to form any view about Mr Mirabito's assertion that Portsea Village Pty Ltd was not the owners corporation manager for the OC.
2. He said in his evidence that it had not been appointed by the OC in accordance with the OC Act and that was why he was of that view.
3. Mr Mirabito's evidence about whether the Rental JV company was the manager of the OC was utterly contradictory.
4. In his initial witness statement dated 2 September 2024 and amended statement dated 26 September 2024[152] which he then adopted in his sworn evidence in chief, he said at para 69:

69 The OC then appointed Portsea Village Resort Pty Ltd (PVR) as the manager of the OC'.

1. Then in his oral evidence to the Tribunal, Mr Mirabito said that the OC never appointed Portsea Village Resort Pty Ltd as the manager of the OC.
2. Yet after the first 'measures' had been put into effect after 1 July 2021, writing to the lot owners on 15 August 2021,[153] on behalf of the PVR Committee - which is to say the committee of the OC of which he was the Chairman - Mr Mirabito said in introducing his 'Update & New Measures', he said (concerning the other litigation that was then on foot in the County Court):

By way of update, you will be aware there was a mediation held on Friday with Peter Searle representing his company Morning [sic] Resorts Pty Ltd. ... we will be resuming litigation, with an appearance in the County Court first thing Monday morning.

Recent events have highlighted the importance of implementing new measures ....

Your Committee is authorised pursuant to the Victorian Owners Corporation Act to implement these measures. ....

Since the departure of Mornington Resorts Pty Ltd under Peter Searle's management, the new rental joint venture (Portsea Village Resort Pty Ltd - 'the JV'), has provided all the services that were provided by Mornington Resorts, with the exception of the common area maintenance which the OC itself undertakes.

In exchange for the licence granted by the OC to the JV which permits the use of the OC's facilities (the reception, laundries etc), the JV provides its services to the OC without charging a fee.

1. Writing to Ursula, Byron and Michael in the 26 October 2021 I just mentioned he said:

Further, the Owners Corporation has advised PVRpl (the Manager appointed by the OC) that PVR Owners have been issued with permanent cut keys ...

1. At all relevant times in this dispute, Pt 6 of the OC Act has governed the appointment, functions and duties of 'the manager of the owners corporation'. It has contemplated different functions being appointed on a manager of the owners corporation.
2. Between 2007 and before 1 December 2021, s 119, 120 and 122 of the OC Act then in force relevantly provided: (emphasis added)

(1) An owners corporation may appoint a person to be the manager of the owners corporation.

(2) If the manager is to receive a fee or reward for carrying out the functions of manager, a person is not eligible to be appointed unless the person is a registered manager.

(3) An instrument or contract of appointment must be in the approved form.

(5) A person must not be appointed as a manager for fee or reward unless the person holds professional indemnity insurance that is sufficient to meet claims up to a level of the prescribed amount in any one year.

120 Functions of manager where there is a committee

(1) If there is a committee of the owners corporation, a manager has the functions conferred on the manager by -

(a) this Act and the regulations; and

(b) the rules of the owners corporation; and

(c) the owners corporation by resolution; and

(d) delegation by the owners corporation.

(2) If there is a committee of the owners corporation, the manager must report to the committee, as required by the committee, on the carrying out of the functions conferred on the manager.

(a) must act honestly and in good faith in the performance of the manager's functions; and

(b) must exercise due care and diligence in the performance of the manager's functions; and

(c) must not make improper use of the manager's position to gain, directly or indirectly, an advantage personally or for any other person.

(a) holds all money held on behalf of an owners corporation on trust for the owners corporation; and

(b) must account separately for the money held for each owners corporation by the manager.

510. Under the Owners Corporations and Other Acts Amendment Act 2021 (Vic),[154] Pt 6 of the OC Act was amended from 1 December 2021 to create tiers of owners corporation. The OC is now a 'tier three' owners corporation consisting of '10 to 50 occupiable lots': see s 7(4). By s 119(1C) a Tier 3 owners corporation may appoint a person to be the manager of the owners corporation. An instrument or contract of appointment must still be in the approved form under s 119(3).[155] The Owners Corporations and Other Acts Amendment Act 2021 (Vic) added a new s 119A precluded certain provisions in the contract of appointment.[156]

1. As the evidence about this question of the actual functions conferred on Portsea Village Resort Pty Ltd was insufficient for the Tribunal to assess, and because the outcome of this case does not depend on the Tribunal forming any view (which would be undesirable given that there are many other lot owners who might to be heard on this question), I express no view on whether Portsea Village Resort Pty Ltd was the manager of the OC within the meaning of Pt 6.
2. I leave it to the OC, which has legal representation, to make sure it has got its house in legal order. I will return to that shortly.
3. The point of significance to the determination of this dispute is that when the OC Rules are objectively construed as being for the benefit of all lot owners in the land subdivision affected by the OC, it makes no difference whether the 'manager' put in charge of issuing the security key cards for the OC is the owners corporation manager within the meaning of the OC Act or some service provider performing a management function for the OC under the authority or direction of the OC or its committee for lot owners and their Invitees.
4. Just as s 140 of the OC Act provides that a rule of an OC is invalid not only if it is 'oppressive to, unfairly prejudicial to or unfairly discriminates against, a lot owner or an occupier of a lot' but also if it is 'inconsistent with or limits a right or avoids an obligation under' the OC Act (or the Subdivision Act), so too does s 202 of the OC Act operate to so that 'a provision of a contract is void to the extent that it purports to exclude, modify or restrict the operation of' the OC Act.
5. These sections highlight the point that contractual arrangements or rules that have the effect of placing the functions that the owners corporation itself has the duty to perform under the regulated statutory provisions and governance environment of the OC Act and purports to place them in the hands of private companies or individuals under unregulated private contracts or other arrangements are highly susceptible to being invalid.
6. If an owners corporation finds itself in that position, that owners corporation could fall within the parameters of being legally 'dysfunctional' and amenable having an administrator appointed by this Tribunal for the special purpose of regularising its internal affairs.
7. For the benefit of Owners Corporation PS302397L and those advising it, if having obtained independent legal advice on the implications of the Tribunal's findings in this dispute the OC needs the assistance of the Tribunal in that regard, it may commence a new proceeding under s 173 of the OC Act for orders for such an appointment to assist it to cure that serious problem.
8. As the Tribunal observed in Owners Corporation 1 Plan No. PS735439F v Singh (Owners Corporations) [2022] VCAT 389, elements of its jurisdiction under the OC Act are not necessarily in the nature of resolving inter partes civil disputes but rather 'supervisory' in nature. As the Tribunal has found in exercising the power to appoint an administrator under the provisions of the Subdivision Act,[157] the Tribunal has a wide discretion to redress the exigencies faced by a particular owners corporation responsible for a land subdivision in Victoria as to how it might fashion the responsibilities of an independent administrator that it might appoint for a special purpose and as to who it might appoint as a suitable professional and independent person for that purpose.
9. As I have mentioned already, the OC has now amended its Rules.[158] The Tribunal was not taken to the notice of general meeting and there was no discussion of the regularity of the resolution or the new rules. I simply record that as appears from the minutes of the AGM held on 6 November 2022 Mr Mirabito reported to the members that the original rules had been in place and wrongly asserted that they had been complied with by the OC in discussing (under at Item 6) that these VCAT proceedings were on foot, which is recorded in the minutes as:

the OC has always, and is continuing to, comply with Rule 6, however there is valid reason to change the rules. The current rules are obsolete.

Ursula ... argued the OC was not complying with rule 6.

The Chairman again confirmed the OC was complying with rule 6 but in any event, as this matter is subject to a VCAT it did not need to be discussed at the AGM and that the OC is happy for the matter to be resolved by VCAT.

• They referred to a 173 agreement that is non-existent
• They have maintenance clauses with council that ended 20 years ago
• They do not address short stay rental accommodation
• They impose obligations on the OC that were designed for a different use. For when it was a time share hotel
• They do not address the new, enforceable, model rules...

Argument that Portsea Village Pty Ltd was a subsidiary of the OC

1. There is one final bit of evidence which took up much time at the hearing. In the hearing, Mr Peter Searle representing the applicants in his family and his company, also sought to show that Portsea Village Resort Pty Ltd was in fact established by the OC with the OC as founding shareholder and that it never passed a resolution to consent to its founding shares being transferred to Mr Mirabito.
2. Documents were called for from Mr Mirabito as he gave his evidence to the Tribunal and were drip fed into the hearing room. An affidavit was produced by the OC's solicitors explaining the difficulties in responding to the different calls being made.
3. Some of the called for documents were tendered by Mr Peter Searle on behalf of the applicants and others, which he contended were forgeries, were not.
4. It is unnecessary for me to form any view on the closing submission of forgery made by the applicants' solicitor who filed the written closing submissions under the name of his firm other than to say that it was one open on the evidence.
5. It is clear that the ASIC records show, as a public record, that the OC was listed as the founding shareholder of Portsea Village Resort Pty Ltd when it was incorporated by those being instructed by Mr Mirabito to incorporate that company.[159]
6. Mr Peter Searle who, as the former barrister and director of his company, had clearly drafted the written submissions and spoke to them, relied on the various declarations of authorisation given to ASIC that had been produced. During the hearing he had called for the resolutions of the OC that had then authorised the changes in shareholding to be made on the ASIC register and none were forthcoming.
7. Leaving that allegation to one side, the applicants submitted that the lack of a resolution from the OC proved that ownership of the shares in Portsea Village Resort Pty Ltd remained in the OC. It had never authorised the registration by ASIC of the change of ownership of shares to occur.
8. While I find that the founding shareholder of Portsea Village Pty Ltd was, in fact, the OC - as is shown by the original certificate of incorporation issued by ASIC and subsequent changes in company details[160] - that to my mind only shows factually that Mr Mirabito who was setting this all up in his capacity as the OC committee Chairman, was originally acting under some belief that he had the OC's authority (despite no resolution having been made at the earlier June 2021 EGM) to make the OC the founding shareholder. Whatever might have been the actual reason for changing the company details with ASIC, that happened as a fact prior to 1 July 2021 when the ASIC records show that the shareholding was changed.
9. To my mind the lack of evidence of OC resolutions is far less compelling than the actual fact that after 1 July 2021 Mr Mirabito wrote his various emails in his role as the OC committee Chairman, telling lot owner members of the OC what the new measures were to be that the committee had put in place and authorised for the access to the OC's security key cards to now be issued by Portsea Village Pty Ltd to lot owner members of the Rental JV and those lot owners who were not. What this historical background context shows is simply consistent with Portsea Village Resort Pty Ltd acting at the direction of the OC committee Chairman.
10. It is unnecessary for the Tribunal to form any view about whether the OC authorised the change in shareholding. Possibly it was a mistake, although that seems doubtful given what Mr Mirabito wrote to lot owners at that time telling them that the OC was the shareholder. By the time of the Unit Holders Agreement, it had been changed with ASIC to show Mr Mirabito as the sole shareholder with him also remaining as director and Mr Cox as its secretary.
11. This factual question is not determinative of the issue of whether the OC breached its rules. I makes no difference who the shareholder of such a service providing company might be.
12. However, I accept the applicants' closing submission that Mr Mirabito's evidence about the incorporation of Portsea Village Resort Pty Ltd 'was so inconsistent from answer to answer, that it was clear he was making it up as he went along'. I also accept the submission that Mr Mirabito's sworn evidence to the Tribunal 'that it was never intended [by him] that the OC was to be a shareholder of Portsea Village Resort Pty Ltd ... was plainly false evidence'. He had been the person instructing others to establish the company.
13. Because Mr Mirabito's evidence on the incorporation of Portsea Village Resort Pty Ltd was so unreliable and untruthful on this point, for that reason I am not prepared to make findings on that factual question against the OC. It is an internal question for the OC as to whether it considers it has a claim to ownership of the Rental JV company and that, ultimately, is a matter between that company (which is not a party to these proceedings) and the OC.
14. Mr Cox did not give any evidence at all about the incorporation of Portsea Village Resort Pty Ltd. I suspect he had no knowledge of its incorporation. But as a secretary of that company and also secretary of Azzure-Pier Street Pty Ltd (being Mr Mirabito's lot owning company), he clearly knew about the business affairs of Portsea Village Resort Pty Ltd.
15. What is determinative for the issue in this dispute is that Portsea Village Resort Pty Ltd, whether or not it was owned by the OC, was acting with the authority of the committee of the OC, to charge the applicant lot owners invalid induction fees. Acting with that authority from the OC it prevented the lot owners of apartments 107, 110 and 211 and their invitees and authorised booking agent Mornington Resorts Pty Ltd, from receiving security key cards for the lots and common property to which they were entitled under the OC Rules unless prior written notice of at least 24 hours (which changed to 48 hours after 23 October 2021) was given and unless 'induction fees' were paid in advance, both of which restrictions were in breach of rule 6.
16. That action, authorised by the OC, breached the applicant lot owners rights under rule 6, and thus breached s 114 of the OC Act, and those breaches extended from 1 July 2021 until each had sold their individual lots in the land subdivision affected by the OC.

Validity of PVR COMMITTEE DIRECTION 24 October 2021

1. While not crucial to the determination of their claim, I also accept the lot owner applicants' submission that the 'PVR COMMITTEE DIRECTION' made on 24 October 2021 at 9:14pm was 'unauthorised' by the OC Rules[161] and was invalid to the extent that it purported to continue to authorise a breach of rule 6.
2. The evidence of there being a proper 'vote of the committee about the purported occupational health and safety elements of that 'committee direction' was unsatisfactory, although there did appear to have been some attempt by Mr Mirabito to ring around to get endorsement to send it. It is impossible for the Tribunal to know what Mr Mirabito told the committee members or what they authorised him to say.
3. To the extent it is necessary to make any factual finding on this question I am not satisfied that Mr Mirabito held any genuine fear or concern for the health and safety of employees of Portsea Village Resort Pty Ltd as expressed in his direction. In his evidence to the Tribunal, it was very clear that Mr Mirabito was quite comfortable in making things up as he exerted his powers. Based on what had taken place in the lead up to the argument and his lack of candour in giving evidence to the Tribunal about what he was actually doing at the time of that singular incident, there is every possibility that at that time this was yet another example.

1. For these reasons I find that the OC breached rule 6 and is liable to refund the money unlawfully charged to the applicant lot owners.
2. The OC's failure to issue key cards to lot owners in accordance with the OC's rule 6, interfered with the rights and privileges of the applicant lot owners as property owners, for which Byron, Ursula and Michael are entitled to be compensated for their loss suffered by putting them in the position they would have been had the breach not been committed by the OC.
3. Ursula, Byron or Michael, as lot owners at the time, were entitled to the benefit of the OC Rules. They were paying fees levied by the OC which was obliged to honour them and did not.
4. As (now) former lot owners, Byron, Ursula and Michael have only sought compensation from the OC for refund of the price demanded by and paid to the manager at Portsea Village Resort for issuing security key cards, that they were compelled to pay to use and enjoy the property rights attached to their lots and in the common property of the land subdivision. The OC having unlawfully authorised that conduct and allowed it rules to be breached must therefore refund those fees with interest by way of compensation.
5. I accept the applicant lot owners' submission that the ongoing effect on them of the new measures that authorised and directed staff at the Portsea Village Resort reception area in control of the OC's key card system not to issue them security key cards without paying the price demanded, was to force them to make other arrangements.
6. Those arrangements were to engage Mornington Resorts Pty Ltd which engaged its employees, from 31 October 2021 to 23 March 2023, to give the prior written notice of arrival at the Portsea Village Resort to the OC and to give the key cards to their Invitees, to be able to honour bookings for their lots.
7. Had to the applicant lot owners incurred additional costs from those new arrangements, or sought general damages for loss of enjoyment of use of land, that might also have been compensable. But their individual legal claims to the Tribunal are modest. They are also the single thing that they complained about and objected to from the outset when the new measures were permitted by the OC committee and its Chairman and Secretary.
8. Accordingly, for these reasons, the Tribunal orders that Owners Corporation PS302397L must pay:
   • Byron Searle $770 plus interest from of the date of commencement of proceeding OC2639/2021 calculated at the rate of 10% until date of this order;
   • Ursula Searle $610 plus interest from that date at that rate until date of this order; and
   • Michael Abell $1,645 plus interest from that date at that rate until date of this order.
9. It is otherwise unnecessary for the Tribunal to make the declaration of invalidity that was originally sought[162] by the applicant lot owners because the Tribunal by awarding compensation, is providing a sufficient legal remedy for breach of the OC's rules. Declaratory relief that the 'induction fees' imposed on the lot owner applicants were unlawful, was not pursued in closing submission by any of the applicants, including Mornington Resorts Pty Ltd.[163]

1. In relation to the applicant lot owners' claim for refund of a special levy, I am not satisfied that this levy was unauthorised or improperly levied. I also note that it did not make up very much of the case and in many respects is a very incidental question of legal submission.
2. The OC had the statutory power to levy fees to defend itself against litigation being brought against it not just by the lot owner applicants but by Mornington Resorts Pty Ltd making other claims against it. I will turn to those separate claims shortly but simply note that at the time they sought many hundreds of thousands of dollars in compensation from the OC. Those distinct legal claims, although based on the same facts, could (and perhaps should) have been brought in a separate proceeding, but being brought in the same VCAT proceeding against the OC as the claims by the applicant lot owners meant that the OC's fee levy to fund itself to defend this proceeding had to be for the whole proceeding, not just the claims of the applicant lot owners. And in defending the claims brought by Mornington Resorts Pty Ltd, the OC was entitled to make a counterclaim if so advised and to levy its lot owners at the time to fund its prosecution.
3. While it is possible for the legal costs and fees incurred to be apportioned after the result of the litigation based on the findings and orders of the Tribunal, the levy of a fee for those special costs could not realistically be apportioned at that time.
4. There was no evidence or argument advanced that the levy of that fee was not within power and the evidence establishes that it was authorised by a vote of the lot owners. I therefore reject that element of the former lot owner applicants' claim for additional compensation.

B. MORNINGTON RESORTS PTY LTD'S CLAIM AGAINST THE OC AND COUNTERCLAIM BY THE OC

1. I now turn to the separate disputes between Mornington Resorts Pty Ltd and the OC.
2. These are entirely distinct legal claims involving common facts but different legal principles.

• 554. Mornington Resorts Pty Ltd is one of the applicants making claims against the OC in proceeding OC2639/2021. It is the respondent to counterclaims by the OC in proceeding OC1321/2022 which span back 6 years.[164]

1. The claims and counterclaims are lengthy and complicated. As I have said, they also changed during the running of the hearing.
2. There are three time frames:
   • Part of Mornington Resorts Pty Ltd's claim against the OC in proceeding OC2639/2021 relates to the period between the May 2021 Terms of Settlement to 30 June 2021. That claim is for payment of services and materials provided to the OC under the MAA for which it claims payment under the Terms of Settlement and the MAA.
   • The other part its claim against the OC relates to the period after 30 June 2021 until date of conclusion of the hearing of evidence in December 2024. There are two claims by Mornington Resorts Pty Ltd against the OC during this period. The first is for return of belongings that it had been unable to retrieve from the common property by 30 June 2021 which it alleges the OC has prevented it from retrieving. That claim is for detinue and conversion of goods. The second claim is for alleged loss suffered by it in acting as booking manager for the applicant lot owners before they sold their lots at Portsea Village Resort. That claim is put on three legal bases.
   • The OC's counterclaims in proceeding OC1321/2022 relate to the period from 2015 until 2021 are also a defence to Mornington Resorts Pty Ltd's claim for payment for services after the Terms of Settlement. While originally the OC had made an allegation of dishonesty in regard to one of its counterclaims against Mornington Resorts Pty Ltd, that allegation was abandoned by Counsel for the OC and the counterclaim was only advanced based on alleged mistaken payment by the OC and alleged breaches of statutory duty and of the alleged express and implied terms of the MAA by Mornington Resorts Pty Ltd.

• 557. I am satisfied that like the lot owners applicants' claims they are each an 'owners corporation dispute' within the meaning of s 162 of the OC Act over which the Tribunal has jurisdiction.[165]

1. I will return to the counterclaims made by the OC later. First, I will deal with Mornington Resort Pty Ltd's monetary claims against the OC.

MORNINGTON RESORTS PTY LTD'S CLAIMS AGAINST THE OC

i. Unpaid invoiced fees for service and materials to 30 June 2021

1. Mornington Resorts Pty Ltd claims payment from the OC for outstanding fees for its management services and work and materials supplied to the OC after the Terms of Settlement until 30 June 2021 when the MAA terminated, in an amount of $13,576 for unpaid invoices plus interest.[166]
2. I accept Mornington Resorts Pty Ltd's claim against the OC for unpaid invoices, and order payment to it by the OC of $13,576.53 plus interest from 31 July 2021 (when they should have been paid if not earlier) until date of this order, calculated at the penalty interest rate of 10% simple interest.
3. It is clear from the evidence that in May and June 2021 Mornington Resorts Pty Ltd continued to fulfill its obligations to the OC under the MAA and Terms of Settlement clauses 4 and 6 as Byron Searle said in his witness statement and Mr Peter Searle confirmed in his and in his oral evidence, on which he was cross examined at length.
4. I have no doubt the provision of these services under the MAA were approved by the OC's Building sub-committee chaired by Mr Mirabito at that time, on which Mr Cox also sat. With the exception of a handful, I find that Mr Mirabito had also approved them for payment by the OC only to renege on that approval given to the OC's accountant, Mr Brown Greaves, who had, based on that instruction by Mr Mirabito, recorded the debts due by the OC in its annual accounts under 'creditors'.
5. Even without that approval, I am satisfied on the evidence the that the commercial services and materials supplied by Mornington Resorts Pty Ltd to the OC were payable under the MAA and Terms of Settlement.
6. With the exception of one invoice, there is no dispute that the services were supplied and this is established in any event by the evidence of Mr Peter Searle and the invoices produced and submitted to the OC for payment, which had been created by Mr Crichton at the time he was engaged to do maintenance work for the OC by Mornington Resorts Pty Ltd, who recorded the work done in his 'Service M8' software system which was the business recording software used by him at the time.
7. I accept his evidence as reliable and honest about that work and those invoices.
8. Mr Paul Crichton sent Mornington Resorts Pty Ltd's final invoice 2716 to the OC on 30 June 2021,[167] which was his final day of work for Mornington Resorts Pty Ltd before he continued working for the OC under its new management arrangements (in respect to which he gave evidence at the hearing).
9. Mornington Resorts Pty Ltd sent detailed invoices for payment and reimbursement for work done and materials supplied to the OC up until 30 June 2021.[168] That they were not paid for by the OC is a breach of both the MAA (which continued to apply according to its terms) and cl 4 and 6 of the agreed Terms of Settlement.
10. A completely unnecessary defence was taken by the OC that some of the duplicate invoices bore different dates. But they were the same invoice and as it transpired, this was a feature of the 'Service M8' invoicing system used by Mr Crichton which automatically dated the invoice on the day it was printed by the system as a new document. There was an agonising waste of Tribunal time dealing with that issue alone which was really quite ridiculous and was quite obviously either a software glitch or misunderstanding in the proper use of the software.

1. The role of the Building sub-committee was purported to be disputed by the OC at the hearing, including by Mr Mirabito but not to any significant extent by Mr Cox.
2. But its role both before and after this period was very clear.
3. It is described in Exhibit 17.17. This is a minute prepared by Mr Cox of the 'PVR OC Committee Site Meeting 30th May 2020' in which he stated: (my emphasis)

The role of the Building Subcommittee (John and Doug) is to approve all expenditure (quotes and invoices) incurred by the OC prior to payment by our Accountant Jeremy from the OC Bank account.

Some of these items are done by external contractors who can be difficult to find on many occasions. Others are done by qualified Mornington Resorts staff of contractors (for example Paul a plumber and Charlie a carpenter). The OC pays [Mornington Resorts Pty Ltd] for all materials and labour based currently on an hourly rate of $60. This is separate from general minor maintenance labour which is covered under the Management Fee.

1. What is clear from this minute, and it is relevant to the OC's counterclaim too, is that the OC had authorised its Building sub-committee to deal with fees for service and materials supplied which Mornington Resorts Pty Ltd was entitled to be paid in addition to its annual Management Fee under the MAA.
2. I accept that Mornington Resorts Pty Ltd's evidence that the OC's Building sub-committee approved the quotes for the work and the work being done, not just for this work after the Terms of Settlement, but as I shall come to also in connection with the work and materials supplied for the period claimed in the OC's counterclaim.
3. The evidence establishes that the Building sub-committee had approved Mr Chrichton's specialist plumbing work at a higher rate of $80 per hour as 'Plumbing Labour'.[169]
4. After these invoices were submitted by Mornington Resorts Pty Ltd, Mr Mirabito prepared an 'MR invoices summary' based on his personal review of the invoices,[170] which he annotated those 'To be processed' which he sent to the OC accountant Mr Brown-Greaves. Mr Brown-Greaves who then recorded them in the OC's accounts for year end 30 June 2021 to reflect Mornington Resorts Pty Ltd as a 'creditor' of the OC.
5. There was a discrepancy between Mr Mirabito's 'MR invoices summary' - which totalled $14,014.03 - and the amount claimed by Mornington Resorts Pty Ltd in its points of claim para 18.[171] Mornington Resorts Pty Ltd particularises the claim under para 18 as $13,576.53[172] stating:

Documents 14.1 of the Application includes [its] resubmitted invoice 2682 for $332.50 (at page 72) and other copy invoices referred to in the Respondent's "MR invoices summary". The total amount outstanding is $13,576.53 instead of $14,041.03, a reduction of $52 for resubmitted invoice 2682 and for [i.e. because of] payment of invoice 2665.

1. Mr Peter Searle confirmed in his evidence that invoice 2665 (of $412.50) had been paid,[173] and that invoice 2682 (of $384.50) had been resubmitted for $332.50.[174]
2. The reason for this small reduction on that invoice had been because Mr Mirabito in his review for payment had notated invoice 2682 for $384.50 as 'Quote was for $332.50. Invoice to be resubmitted'. Mr Peter Searle, in his witness statement filed before the hearing (adopted in his evidence to the Tribunal), agreed that the quote was for $332.50[175] so that the original invoice could be reduced by $52 to match the quote.
3. Mornington Resorts Pty Ltd submitted that the other 'comments' and queries Mr Mirabito made in his 'MR invoices summary' (attached to his email dated 2 September 2021) had been answered by Mr Peter Searle in his email to the OC on 3 September 2021,[176] earlier explanations having been given in emails from him on 30 April 2021 and 30 June 2021. [177]
4. In closing submission, Mornington Resorts Pty Ltd only pressed payment for $13,576.53.
5. I accept Mornington Resorts Pty Ltd's submission that these invoices (except one) were clearly approved by Mr Mirabito on behalf of the OC.
6. I accept too that they are payable 'pursuant to agreements the OC entered into with Mornington Resorts, including cl 6 of the Terms of Settlement dated 14 May 2021',[178] and became overdue within 30 days of the invoices being rendered. I will allow interest from 31 July 2021 on the total.
7. At the hearing the OC pressed its defence to these claims for moneys owing. I will address the OC's specific submissions.
8. The disputed invoices in the table of invoices total 23 in number.

Invoices 2787, 2782, 2741, 2740, 2739, 2720 and 2716

1. The OC submitted that 7, totalling $758.68, (invoices 2787, 2782, 2741, 2740, 2739, 2720 and 2716), were 'not in evidence' and therefore those claims 'must fail'.
2. I do not accept that. They were listed in Mr Mirabito's 'MR invoices summary'. He had seen them and sent them to Mr Brown Greaves to process. Mr Peter Searle gave evidence that the work had been done and the invoices for the work had been submitted to the OC for payment.
3. I find that the work done in those invoices was done, that the invoices were received by the OC, and they were unpaid. There being no substantive defence to them (and only the evidentiary point taken that the invoices were not tendered which I do not accept), I therefore find those claims for payment proven.
4. The OC accepts that the balance of the invoices totals $12,818.35.[179]

1. The OC submits that invoice 202 for $4,121.83[180] relates to 'Reimbursement of Telstra internet and data lines $239.54 (Excl GST) and $72.72 (Excl GST) per month'. It relies on Mr Mirabito's evidence that the invoice related to internet and data to various apartments at Portsea Village Resort,[181] and submits that his evidence should be accepted and that 'on that basis, the invoice was not properly chargeable to the Owners Corporation'.[182]
2. I do not agree. No foundation was put for that submission other than Mr Mirabito's interpretation of the MAA.
3. Clearly a 'service' of that nature is to individual lots. Clearly it was one that the 'manager' appointed by the OC under the MAA organised, and which the OC agreed to reimburse as a cost to the OC's expense under that agreement.

1. The OC submits that invoice 203 for $387.20[183] relates to 'Telstra mobile service charges for two mobile sim cards for fire alarm and elevator respectively, $44.00 per month for 8 months'. It relies on Mr Mirabito's evidence that the invoice had been paid.[184]
2. I do not accept Mr Mirabito's evidence. There was nothing to corroborate it. The OC could easily have produced evidence of payment if it was true, but did not.
3. Mr Peter Searle gave evidence that all the claimed invoices remained unpaid. I accept his evidence.

Maintenance works performed by Mornington Resorts for the OC containing a labour component

1. The remaining 13 invoices[185] in the disputed table of invoices are not disputed by the OC on any basis other than that they 'are for maintenance works performed by Mornington Resorts on behalf of the OC and contain a labour component'. [186]
2. The argument in relation to these is tied up with the interpretation that the OC places on the MAA that 'Wages-Maintenance' was a component of the Annual Management Fee that Mornington Resorts Pty Ltd was paid under the MAA and therefore, so the OC alleges, it was 'not entitled to separately charge the OC in respect of labour for those maintenance works'. [187]
3. The labour component in those 13 invoices is $2,278.32; the materials component is $2,226.32.
4. In para 19A of its points of defence the OC claims a set off $2,278.32 against that materials claim of $2,226.32. [188]

1. It also submits that the labour component in invoice 2714 was unreasonable.
2. The work described by Mr Crichton in the invoice was as follows:

Called during the regular pool service it was noticed that one of the floor suction covers in the indoor spa has broken loose, leaving NO safety cover over the suction inlet. To repair this properly the spa was closed and emptied. Repairs to floor suction cover, re attached cover base to tiled floor with ferropre joint compound, whilst spa empty remove old dirty grout and replace with new anti bacterial and mould resistant grout.

1. The invoice lists material of $170.38 and labour of $3,450 (comprising 57.5 hours at $60 per hour). Mr Chrichton gave evidence that he had quoted Mr Mirabito 12 to 15 hours for this job. Mr Mirabito also said that was the case. [189]
2. In his MR invoices summary narration, Mr Mirabito having reviewed this submitted invoice had therefore written:

Not approved. Work quoted at 12-15 hours. Although work not approved we will accept 12 hours per quote.

1. This was an important piece of evidence from Mr Mirabito which contradicted his evidence to the Tribunal that all he was doing was giving an indication of his attitude to the Building sub-committee.
2. It showed clearly that Mr Mirabito in his 'MR invoice summary' sent to Mr Brown-Greaves, was approving invoices for payment or not for payment.
3. Mr Mirabito wrote 'Not approved' when that was actually what he meant.
4. There was no evidence from Mr Cox that he had told Mr Brown-Greaves that he disagreed and as I have noted, the OC's annual accounts produced by the external accountant then included these approved payments as 'creditors' of the OC. That part of Mr Mirabito's evidence was simply implausible. It was also not interpreted that way at the time by the external accountant, Mr Brown-Greaves who treated the MR invoices summary notations made by Mr Mirabito stating those items that he had approved 'for processing' as being items to go into the OC's annual accounts. It is hard to conceive of why the OC committee Chairman would have sent his table to the external accountant with the control over the bank account and charged with preparing the OC accounts if he had not wanted him to process those items. That would be double handling and potentially add further expense to the OC, which Mr Mirabito stressed to the Tribunal was something he as a businessman was trying to reduce.
5. I return to the OC's submission that invoice 2714 was not approved because it was quoted for 12-15 hours and that 57.5 hours was unreasonable.
6. I find that the honest and reliable evidence about this was of Mr Chrichton. Apart from his evidence I have dealt with already and about the light globes (to which I will come) I found him to be generally a reliable witness with a clear recollection about the work he did or which others did and of the quotes and invoices he prepared while employed by Mornington Resorts Pty Ltd.
7. His evidence was that of someone loyal to his employer, which is an admirable quality but presented him with some difficulty - after his working arrangements had changed to the new guard - when answering questions the answers to which might harm his new employer. He found it easier to answer questions frankly when I asked him than when being asked questions on the same topic by Mr Peter Searle.
8. From Mr Chrichton's evidence it was clear that he was no longer supportive of Mr Searle and on almost all occasions when asked by Mr Searle if Mr Cox had requested an item of work to be done at the resort he either denied a recollection or where he accepted that Mr Cox had been involved was keen to state that it was Mr Searle who had directed him to do the work, not Mr Cox. Yet on occasions when I asked whether Mr Cox had been interested in the particular job, Mr Chrichton was far more open in his preparedness to positively recall Mr Cox's involvement and had a clear recollection of Mr Cox's involvement one way or the other.
9. Therefore, where there was a disagreement or difference between the evidence of Mr Peter Searle and Mr Chrichton about the involvement of Mr Cox in works done at the resort I prefer and accept the evidence of Mr Peter Searle.
10. I record Mr Chrichton's evidence on this topic which the OC relies on in full:[190] (I have put the answers in bold and added italics)

MR P. SEARLE: Sir, could I take you to the next one down on p.83. Do you see invoice 2714, pool repairs, $3,982.43? Mr Mirabito's narration is: "Not approved. Work quoted at 12-15 hours. Although work not approved we will accept 12 hours as per quote."

That's what Mr Mirabito has written. Could I just take you back to that invoice at p.92. Are the works in this narration here, the 57.5 hours, that's substantially more than - - -?---Yes.

Could you explain that to the tribunal, please?---Yes. [Name removed] was a lazy so-and-so and that's the hours it took him to do the work and that's what I entered into the system.

DEPUTY PRESIDENT: So you were the one that put in 57.5 hours?---That's how long it took.

Notwithstanding that - - -?---Not the entire job. I probably had two hours of that work to do the pool suction/floor rectifications.

That was the hours he told you?---That was the hours it took, even with me riding him.

Okay?---He was a good friend of Byron's and a family friend of the Searles.

Nevertheless, you prepared an invoice for 57.5 hours?---Yes.

Was it your decision to put in the figure 57.5 hours?---I can't recall whether Peter and I discussed it or I just put them in, probably out of angst at how long it took him to do the job.

Were you aware what the quoted period of time was?---Yes.

This was an invoice that was going to the Owners Corporation Strata Plan 302397?---Yes.

Did you discuss with Mr Cox or anyone why there was a difference - - -?---No. I discussed that one with Peter.

And you just put in the actual hours - - -?---Actual hours.

1. I accept Mr Peter Searle's evidence that he had no involvement in the preparing these particular invoices to the OC, and that Mr Crichton prepared the invoices in his software program and sent them to the OC.
2. What Mr Cox told the Tribunal Mr Crichton had told him about this work done in the spa-pool, turned out to be incorrect. Whether it was an imperfect recollection or something else, it is unnecessary to speculate. Mr Cox suggested in his evidence that Mr Crichton told him that he knew nothing about the labour bill. Mr Crichton in his evidence under oath freely said that he had been intimately involved in doing the job. He had done the repairs to the filter himself that required the application of a 2Pac and had supervised the unskilled labourer who did the grouting work who he said he had to 'ride' to get the job finished. And knowing it was well in excesses of his quote he nevertheless prepared and sent the bill for the work using his software program.
3. The OC submits that because the number of actual hours taken to do the job (57.5 hours) was more than three times the number of hours at the upper end of the quotation provided (15 hours) then:

If (contrary to the OC's contention) the Tribunal finds that 'labour' components of the unpaid invoices are payable, the Tribunal should conclude that the amount charged for labour in this invoice was unreasonable and should order payment of $900 (being 15 x $60) for labour in respect of this invoice.

1. Thus, the OC has conceded that 15 hours (not 12 as previously allowed by Mr Mirabito in his table) is reasonable.

1. I reject the OC's argument that the 'labour components' in this and the other unpaid invoices falls for Mornington Resorts Pty Ltd to bear as part of the annual fee under the MAA.
2. I will explain my findings about this when I come to the counterclaim. These claims for labour are for specific work jobs authorised by the OC. They are in my view clearly additional fees that Mornington Resorts Pty Ltd is entitled to be paid for its fee for services under the MAA at the rates agreed by the Building sub-committee for labour and to be reimbursed for external suppliers of labour, in addition to the materials supplied as part of each job.
3. Mornington Resorts Pty Ltd was wearing two hats under the MAA - owners corporation manager and resort manager. The MAA clearly contemplated that additional fees and expense could be claimed Mornington Resorts Pty Ltd wearing either of those hats as a supplier of services to the OC in addition to the annual fee.
4. Indeed, even Mr Mirabito, wearing his approval hat as the OC committee Chairman was accepting of the fact that the pool spa job was not part of the annual fee, allowing 12 hours of the 12 to 15 hours quoted.
5. The fact that this job, and the others, had involved a quote being given to the OC shows that there was an understanding before the work was done, and before the contractors engaged by Mornington Resorts Pty Ltd or services supplied by its staff under the MAA, that the work job would be paid for by the OC as an additional cost to the OC.
6. However, the spa pool job was the single unpaid invoice where I consider there was room for a discount to be legitimately applied.
7. While I accept that this was the cost of the job it was much more than the quote there should fairly be some adjustment to the fee for service charged. This often occurs in service delivery contracts. A quote is a quote, not a fixed price. But where the quote turns out to be much less than the final price, it is quite common in commercial practice for the contracting parties to discuss and agree a reasonable fee.
8. In this instance, the manager of the OC has a statutory obligation to act in the interests of the owners corporation. It has a statutory obligation under s 122(1)(a) and (b) of the OC Act to 'act honestly and in good faith in the performance of the manager's functions' and to 'exercise due care and diligence in the performance of the manager's functions'.[191]
9. No allegation was made in connection with this payment about any failure to exercise due care and diligence or lack of good faith. But the evidence from Mr Crichton does cast some doubt on whether this job was done with efficiency. For that reason, rather than for any failure to perform a statutory duty, I am not prepared to accept that the 57.5 hours was fair and reasonable, although I do accept Mr Crichton's evidence that that was how long it took. Sometimes when a witness gives evidence in their own words in answer to a direct question there is such a ring of truth about the answer: 'That was the hours it took, even with me riding him'.
10. While I appreciate that the full labour costs might have been paid by Mornington Resorts Pty Ltd to that contractor (or perhaps part time employee) and to Mr Crichton his work, the evidence is clearly that the job took longer than Mr Crichton had thought it would take and had quoted for the job. And while it was just a quote, I accept that the labour costs were three times the quote, and it is unreasonable to pass it on to the OC in full.
11. The parties could not agree what was fair and reasonable for this work.
12. Assessing what is fair and reasonable, I have taken into account that the job was an urgent job 'to fix the suction cover' in the spa. What occurred was that 'To repair this properly the spa was closed and emptied'. While the two men were doing the 'Repairs to floor suction cover, re attached cover base to tiled floor with ferropre joint compound', what also occurred (and possibly might not have been quoted) was that the other labourer was doing other work described by Mr Crichton in the invoice: 'whilst spa empty remove old dirty grout and replace with new anti bacterial and mould resistant grout'.
13. While it may well be that the other labourer was a good friend of Byron and a family friend of the Searles, as Mr Crichton says, I take into consideration that engaging a friend who you know to do work is far from uncommon in country settings where people know each other in the community, and perhaps more common than might be the case in the city or suburbs. Regrouting can be hot and dirt and cramped work, and the Tribunal received some evidence about that. It may have been that there was no one else available at short notice to do this work, the repair job needed to be done quickly while the spa pool was drained.
14. In this case, although the regrouting did not quite turn out to be a quick job, the work was completed. No complaint was made by the OC whose committee Chair had no difficulty being prepared to pay for the lower end of the quote when he was approving the invoices submitted by Mornington Resorts Pty Ltd. There is no dispute that that invoiced work was done and the benefit of the repairs and refurbished grouting to the spa was received by the OC.
15. Taking all these factors into account, while the overall labour cost of that work was not high in the scheme things, I accept it took too long. I will discount that labour cost of $3,450 (comprising 57.5 hours at $60 per hour), by deducting 27.5 hours, or $1,650 (plus GST).
16. The order for payment that I will make reflects that the OC must pay that invoice 2714 of $170.38 (plus GST) for materials and $1,800 (plus GST) for labour and , which equals $2,167.43 (inclusive of GST).

1. Mornington Resorts Pty Ltd claims compensation for the value of its property items that it alleges it was unable to remove and denied permission to retrieve from Portsea Village Resort after its management period ended on 30 June 2021.
2. At the commencement of the hearing the claim under the tort of detinue and conversion was for $16,429[192] plus interest.
3. However, the complexion of this claim changed dramatically after the conclusion of evidence. The OC having denied having possession of any of the items then changed its position and informed the Tribunal that it did have some of the items and made them available to Mr Searle for collection.
4. This claim should not have been resisted by the OC the way it was. The approach adopted by the OC was, if not vindictive, not promotive of settlement of what was an easy claim to resolve. It could have been resolved on 1 or 2 July 2021.
5. Following the mediation and Terms of Settlement reached between the OC and Mornington Resorts Pty Ltd in May 2021, an audit meeting was held at Portsea Village Resort which Mr Peter Searle attended with Mr Cox and the solicitor then acting for the OC, Effie Kavadas.
6. Effie Kavadas was not called as a witness and Mr Cox gave no evidence about it, but Mr Peter Searle did which I accept as follows.
   • On or about 23 June 2021, he attended an "audit" meeting at Portsea Village Resort with committee member Doug Cox and the OC's solicitor, Effie Kavadas.
   • 'At that meeting Doug Cox and the OC's solicitor agreed that all of the OC's property which the OC had paid for, was on site.'
   • They were friendly and asked me 'if Mornington Resorts Pty Ltd would be prepared to sell some of its on-site property instead of removing it pursuant to the Terms of Settlement'.
   • 'I agreed, and said I would prepare a list of the property Mornington Resorts Pty Ltd would be prepared to leave on site and sell to the OC'.
   • 'Pursuant to that undertaking, I sent the following email and attached list to the OC on 27 June 2021:[193]

I refer to your letter dated 24 June, 2021 and to your asset audit of the property belonging to the Owners Corporation.

As you have audited and are aware, all of the property belonging to the Owners Corporation is in the common areas.

You asked for a list of the property of Mornington Resorts Pty Ltd which your client may consider whether it wishes to purchase before we remove it in accordance with the Terms of Settlement.

The list of property which your client may purchase from Mornington Resorts Pty Ltd is attached, at a total cost of $31,180.

1. Mr Peter Searle says that he retrieved some of the property belonging to Mornington Resorts Pty Ltd but:

I left some of Mornington Resorts Pty Ltd's property on site in the last week of June 2021,[194] as I expected the OC and its agents to buy most of it including the list of property the OC requested and which I sent to the OC on 27 June 2021.

1. That was a reasonable approach for him to take at that time. It had been requested. The price had not been agreed but nor had it been rejected.
2. What happened was (as I have said) that it was not until 30 June 2021 that the OC's solicitors responded to Mr Peter Searle by email to say:[195]

We take this opportunity to advise that our client does not wish to purchase any of the items belonging to Mornington Resorts (as per list circulated on 27 June 2021).

After seeing that email, I drove from Portsea to Frankston and quickly hired a truck late on the afternoon of 30 June, 2021. We loaded some of the property listed at $31,180 onto the hired truck, reducing the cost of Mornington Resorts Pty Ltd's property which remained on site from $31,180 to $16,429. [196]

1. The OC accepts that 'the evidence given at the hearing establishes that on 30 June 2021 Peter Searle attended the resort with a truck and removed certain items listed in the Property Schedule' and that 'Paul Crichton assisted Peter Searle to load up and remove the items'.[197]

1. In these Tribunal proceedings, Mr Peter Searle prepared a 'Revised Property Schedule' listing the items he claimed were still at Portsea Village Resort that he wanted back, claiming their cost to total $16,429.59.[198]

1. Mornington Resorts Pty Ltd submits that the OC prevented it from either 'using or taking its own property from Portsea Village Resort since 2021' and that the OC or its 'subsidiary/agent' Portsea Village Resort Pty Ltd:

has used and/or consumed the property as its own, using the foldaway beds and cots to make profits, installing the light globes into the common property, and using the food and selling it back to the applicant lot owners and others as part of breakfast and other meal packages.

1. The tort of conversion is committed by an unlawful interference with 'title in the goods'. It occurs where a defendant has 'dealt with the chattel in a manner which is so seriously inconsistent with the plaintiff's right to possession of the chattel that it amounts to a denial of that right'.[199] In contrast to the tort of trespass to goods, the cause of action of conversion is available to a plaintiff:

who is out of possession at the time of the defendant's act ... The tort of conversion compensates for loss of the right to obtain possession of the chattel. Accordingly, the plaintiff must show a right to immediate possession, and that the defendant's act was a denial. The tort may be committed in diverse factual circumstances. It does, however, generally require a positive act by the defendant, as opposed to mere non-feasance.

1. The cause of action of detinue is distinct but overlaps with conversion in the following way:

The action for wrongful detention of goods, is again, as with conversion, proprietary in nature. The tort is committed by the wrongful refusal to return goods to the plaintiff on demand. In this feature, it is theoretical1y distinct from conversion which requires intentional interference with the goods. Detinue is not committed by the defendant until a demand has been made by the plaintiff, and the defendant has refused to surrender the goods. Whereas a conversion may be evidenced by a demand and refusal, these are essential ingredients of detinue. The tort of detinue is also distinct from many cases of conversion by not carrying the general requirement of an intentional act. An unintentional detinue is possible. In common with conversion, in detinue the plaintiff must show an immediate right to possession of the goods at the time of the refusal. It is again distinguished, however, in the method of assessment of damages. In conversion, damages are assessable at the date of the commission of the tort. Damages in detinue are assessed as at the date of judgement

1. A defendant can escape liability for conversion if it can establish the defence of 'jus tertii' - that a third party has a greater right to possession - but only in a limited number circumstances:

The principle of the defence is that a plaintiff succeeds if he can show a better title than the defendant to the goods, and that in general, a defendant cannot defeat the plaintiff's claim by showing that a third party has a better right to the goods than either of them. The plaintiff in possession had, at common law, good title to the chattel as against all strangers. His right of possession could only be disturbed by the true owner, or those claiming through the true owner, or a person with some other superior title effective against a party in possession. A defence of jus tertii may be available to a defendant who can show either the authority of the owner to deal in the goods, or the owner's authority to defend the action.

1. I accept the evidence presented by Mr Peter Searle that all the items either belonged to, or were possessed by, Mornington Resorts Pty Ltd at the time it could not retrieve them all by 30 June 2021.
2. There is little doubt that Mornington Resorts Pty Ltd asked that they be returned to it. That demand was maintained throughout these proceedings.
3. In relation to the food in the restaurant and restaurant equipment, there was evidence that Mornington Resorts Pty Ltd made an agreement with the commercial operator of the restaurant at the time to purchase it. Mr Searle gave evidence, which I accept, that the commercial operator did not then pay for the food or other items of property that he agreed to buy. Mornington Resorts Pty Ltd therefore maintained it was entitled to claim against the OC for its wrongful detention of those items left on the common property that did not belong to the OC.
4. At the hearing the OC did not dispute (except for a handful of items) that Mornington Resorts Pty Ltd had owned and possessed the items. However, it contended that property in the items purchased by the restaurant operator had passed under that sale contract and that some other items - being light-globes - had been moved to Ursula Searle's apartment and that they had then been sold by her when she sold her apartment, because the terms of contract of sale of land contained a provision that the purchaser of the land purchased the chattels on the land.
5. Throughout the hearing to the conclusion of evidence, the OC otherwise denied any of Mornington Resorts Pty Ltd's property remained at Portsea Village Resort. Evidence was tendered and cross examined on that basis.
6. Then, after evidence closed, on 9 December 2024 the OC's solicitors acting in the litigation (Best Hooper) acting on instructions from the OC wrote a letter to Mornington Resorts Pty Ltd's solicitors stating some ten items had now been 'located'. The letter said these items had been moved by the OC to a 'secure storage location at Portsea Village Resort' for Mornington Resorts Pty Ltd to collect. In continuing to deny the claim the letter said:

'Some of the items listed [the Revised Property Schedule in TB3 p 109] have been located at Portsea Village Resort',

'In order to narrow the issues in dispute, and without any admission of liability, [the OC] has moved the items into a secure storage location at Portsea Village Resort and hereby invites [Mornington Resorts Pty Ltd] to now collect the items'.

The items that have been located and are available for collection ... are as follows

(b) POS Terminal + PC touch display monitor;

(c) Digipos/cash sales;

(d) Bar printer + kitchen printer

(e) HP computer

(f) Cooking pots

(g) Small safe

(h) Water jugs conference

(i) Menu stand

(j) Computer.

1. Mornington Resorts Pty Ltd had sought return of these items after 1 July 2021 and had commenced these legal proceedings to secure their return.
2. Over the course of 4 years the OC had steadfastly denied it had any of them in its possession at Portsea Village Resort, yet it clearly did.
3. That amounts to detinue and conversion by the OC for which Mornington Resorts Pty Ltd is entitled to be compensated by way of damages.
4. By inviting Mornington Resorts Pty Ltd to collect the items, although the OC denied liability it implicitly accepted those were not items over which the OC held any possessory or ownership claim and that Mornington Resorts Pty Ltd had a greater possessory claim than the OC, even though it did not accept that they necessarily belonged to Mornington Resorts Pty Ltd (contending some had been sold by Mornington Resorts Pty Ltd to the restaurant operator).
5. The words used by the OC in its solicitors' letter denying liability are immaterial. So is the allegation made by Mornington Resorts Pty Ltd that Portsea Village Resort Pty Ltd was the OC's subsidiary or agent. The fact is that the goods were, and had always been at Portsea Village Resort and the OC had denied Mornington Resorts Pty Ltd the ability to retrieve them despite being requested.
6. I accept Mornington Resorts Pty Ltd's closing submission that the OC's belated concession that it had 'located the items after more than three years of legal proceedings in the Tribunal is evidence of the OC's vexatious conduct and time wasting in these proceedings and I will hear submission on costs about that.
7. While those items were promptly collected by Peter and Ursula Searle on 14 December 2024,[200] the other remaining property items were not.

1. I have set out in the table below the Revised Property Schedule of remaining items not collected on 14 December 2024. The Tribunal received submissions in March 2025 about them.
2. In the table, I have identified those items where the OC claims a defence of jus tertii.

1. I will deal first with the OC's defences that an item was not owned by Mornington Resorts Pty Ltd or was sold to the restaurant operator.
2. To summarise the defence of jus tertii I adopt the summary of the law reform committee report in 1997 that I have mentioned.[201]

The plaintiff must make out title by showing at least a prima facie right to possession either by ownership or some other means. The defendant may seek to impeach that title in the following situations.

If the goods were in the plaintiff's possession at the time of the interference the defendant cannot successfully defend by a claim of jus tertii. The superior title of a third party is irrelevant. Even if the goods have been returned to the true owner by the defendant.

If the plaintiff has never been in possession, he must recover on the strength of his title alone. Where it is shown that a third party has better title this defeats the basis of his claim.

If one who has bare possession of a chattel altogether and then seeks to recover it from a subsequent possessor defendant, the title of the true owner can be set up against him if the true owner is known. To show a right of possession the plaintiff must rely on his title, which is inferred prima facie from his possession. This prima facie claim to title is rebutted when true ownership is proved. There is a possible but undefined exception to this in the case of prior abandonment by the true owner

If a plaintiff in trespass or conversion seeks to recover on his title only, it is always permissible to show that such title had ceased before the date of the alleged wrongful act or that the plaintiff is estopped and the estoppel feeds the title.

A bailee is not as a general rule entitled to set up a jus tertii against the bailor in respect of the subject-matter of the bailment, whether the bailment is constituted by a delivery or by an acknowledgement of the bailor's title to the goods in the bailor's possession. The bailee is estopped from disputing his bailor's title.

1. I am satisfied that on 1 July 2021 Mornington Resorts Pty Ltd has made out title by showing a prima facie right to possession by ownership and possession. The items were the subject of a stock take in June 2021 in which Mr Crichton was involved.[202] Mr Peter Searle also gave oral evidence of ownership and possession, which I accept. Mornington Resorts Pty Ltd also produced receipts for some items.[203]
2. In relation to the RESTAURANT items, as I have said, the food, drinks and restaurant items were the subject of the sale agreement with the restaurant operator on the common property at Portsea Village Resort, Simon Higgs.
3. In my view, this is not really an application of the defence of jus tertii - which relies on a third person having a greater right to ownership or possession - but rather a question of evidence.
4. The evidence does not establish that any detinue or conversion of those items by the OC. Possession had been given to Simon Hicks. Although the restaurant operator may not have paid for the food and drinks, whether or not property passed to him, they are likely to have been used by him in providing meals and refreshments to lot owners and guests to the resort, or to have been thrown out at some point in time as unusable.
5. I therefore reject the claim for detinue or conversion of those items. It is irrelevant that the meals might have been part of meal packages purchased from him by guests or Portsea Village Resort Pty Ltd or by the OC.
6. I make the same finding in relation to the other RESTAURANT items of equipment marked with an asterisk.
7. Given that they were sold to Mr Hicks, it is probable that he disposed of them at some point even though some restaurant equipment items have since been found by the OC. While I accept that it is also possible that these items might be lying around somewhere at Portsea Village Resort, I am not satisfied on the evidence that the OC has withheld possession of them or converted them to its own use. It is just as possible that some of these items might have been kept by the former restaurant operator as having some use to him after his restaurant closed. I am not satisfied that it is more likely than not that the OC withheld these items.
8. Therefore, I reject those claims I have marked with an asterisk. It was up to Mornington Resorts Pty Ltd to enforce payment for that stock, including the beer, soft drinks, wine and spirits.
9. Mr Peter Searle said that his beloved muscat cask was not part of that sale agreement which I accept. However, even that being so, the fact is that it has not been able to be found. The real possibility is that it went the same way as the wine and spirits that were sold.
10. Regarding the RECEPTION item of the Glass Fridge, while not part of that restaurant agreement, the submission put by the OC is that it was never owned by Mornington Resorts Pty Ltd and the item is no longer there.
11. I reject the OC's submission that Mornington Resorts Pty Ltd did not own it. However, the evidence on the whereabouts of this item or what became of it is inconclusive. It is also possible that as a 'kitchen like' item it went the same way as the restaurant items or was moved at some point by someone working at the reception area. Again, the burden of proof lies on the applicant making this claim to establish that the item was detained or converted by the OC. Mornington Resorts Pty Ltd has not discharged that burden to my satisfaction.
12. The MAINTENANCE item of the Light Globes, however, falls into in a different category.
13. The Tribunal received evidence of these being lights that were quite specific to the needs of the land at Portsea Village Resort. When, as manager, Mornington Resorts Pty Ltd needed to replace a light globe, Mr Searle said it used its own stock on hand which it purchased when it was doing a re-stock (rather than on an 'as needs' basis which the previous manager had apparently done and which I was told led to additional charges for travel time).
14. I reject the OC's submission that this property was sold by Ursula when she sold her apartment under the terms of her contract of sale. She had no title to sell property that did not belong to her. The submission is also contrary to the fact. Mr Crichton gave an account in his evidence in chief that he put them in Ursula's room and that they were therefore, in effect, returned to Mornington Resorts Pty Ltd. However, in cross-examination he accepted that in truth when Ursula sold her apartment, he took them back and used them as maintenance stock for the resort.
15. This withholding of evidence of the real situation damaged Mr Crichton's credibility. As I have said, in giving his evidence he showed himself to be partisan to his current employer under the management arrangements controlled by Mr Mirabito. While this non-disclosure was another example, I accept that this evidentiary omission in his written witness statement may not have been Mr Chrichton's fault entirely. It could have depended on what questions he was asked. However, the omission of that evidence from his witness statement exacerbated the OC's time wasting in these proceedings and harmed the OC's case. Clearly it could and should have been included in his witness statement even though it was against the OC's interests for him to give that evidence.
16. I am satisfied that these light-globe items belonged to Mornington Resorts Pty Ltd and were withheld by the OC, with some converted by the OC to its own use by installing them into the common property, when lights were changed. The OC and its Building sub-committee authorised and supervised maintenance work after it took over from 1 July 2021.
17. Mr Crichton is now the caretaker for the OC and his evidence shows that the light lobes were back in the possession and control of the OC. To the extent that they had not been used by its caretaker, the light-globes have not been returned by the OC and that amounts to detinue.
18. I will allow this claim in full. Mr Peter Searle gave evidence of its purchase cost which is likely to be less than the current retail prices. The cost of light globes was $1,905 and that is the amount I assess as fair compensation.
19. The LINEN ROOM was the subject of other evidence to which I have referred earlier. I am satisfied that the items listed as being kept in the linen room were all left behind and were converted by the OC.
20. Mr Mirabito himself gave evidence that he knew about the porta cots and rollaway beds, stating that 'the OC or Portsea Village Resort' bought porta cots and rollaway beds. But the OC produced no invoices or receipts or bank statements showing the purchase of the particular items claimed by Mornington Resorts Pty Ltd for which it produced receipts.
21. I reject this evidence from Mr Mirabito. It would have been a very easy thing to do for the OC to produce that evidence in response to the invoices for purchase of such items produced by Mornington Resorts Pty Ltd. [204]
22. The OC committee Chairman had permitted staff employed by Portsea Village Resort Pty Ltd who managed the day to day operations of the Rental JV to operate the reception area and engage cleaning staff to do room changeovers after Mornington Resorts Pty Ltd ceased as resort manager. Given that the 'locked' LINEN ROOM was in fact part of the common property non-exclusively licensed to Portsea Village Resort Pty Ltd as the new manager, it is more likely than not that these items were used for guests of other lot owners to the Portsea Village Resort without staff actually knowing who they really belonged to.
23. The cost total is only modest, adding up to $2,800. The evidence is not that they were new and there is no evidence of replacement costs. In assessing the value of those converted items I discount the claimed cost by 50%, and award $1,400 in compensation.

1. I now return to assess compensation for the returned items. I have listed them below, with the costs claimed by Mornington Resorts Pty Ltd.[205]

1. The compensation to be awarded for these now returned items - which I find had originally been detained - is properly and fairly to be assessed under principles for assessing loss and damage under the tort of detinue. I have little to guide me on that assessment.
2. Discussing the assessment of damages, the 1987 South Australian law reform committee report observes:

The separate historical developments of detinue and conversion have ensured the preservation of two fundamental distinctions in those actions.

First the gist of the action of detinue is an unlawful failure to deliver goods when demanded. Demand and failure to deliver may and generally will evidence an actionable conversion, but without both there can be no actionable detention. Secondly in detinue a plaintiff may sue for the recovery of the goods in specie. An actionable conversion entitles the plaintiff only to damages. This results in a third distinction, namely the method of assessment of damages. In conversion, the damages are assessed as at the date of the action of conversion, which in practice will usually be the date of refusal after demand. However, recent authority seems to indicate that the quantum of damages is not necessarily affected whether the loss is computed from the date of refusal or the dated of judgment, since the assessing judge has the two variables of punitive damages and interest by which any real losses may be made good, even where chattels fluctuate in value [Egan v. STA (1982) 31 SASR. 481]. In assessing damages in either detinue or conversion, all aspects of the loss sustained by the plaintiff must be considered, irrespective of whether the action is brought in detinue or conversion. As White J. observed in Egan v. STA (at 521) ... complications arise out of the fact that the different torts are deemed by law to have been committed at different times: the time of refusal of demand, and the date of judgment. His Honour in that case adopted the analysis employed by Ogus, The Law of Damages (1973) by examining the compensable loss in terms of "static/basis" 1oss, descriptive of loss in value of the goods caused by the tort, and "dynamic/ consequential" loss in respect of those damages compensating for the inability to use or exploit the chattel during the period of its conversion or detention.

Compensation is not then to be expressed in terms of value of the chattel. Instead it is considered in the context of the goal of the common 1aw: attempting to place the victim of a tort, so far as money is capable, in the position he would have been had the tort not been committed. ...When damages are assessed in conversion, they are translated into money terms that will successfully compensate the' plaintiff at the date of judgment. It is only in this way that the objective of compensation can be achieved. It is submitted that the alternative of allowing a defendant to pay for his wrongdoing at a value which may be substantially lower than at the date of judgment will result in an unjust enrichment of the defendant. ... Both torts may lie on the same facts: wherever there is an alleged detention there will probably also be the possible a1 legation of a conversion. The consideration that will distinguish the appropriate action will be whether the plaintiff wishes to regain possession of the chattel in addition to any damages for loss sustained during the period of detention or for damage to the goods.

1. While I heard evidence from Mr Searle about how attached he was to his muscat cask, I am not convinced that his company's attachment to these now returned items, or need for them, was terribly high, in contrast to the porta cots which his company needed access to while continuing to act as rental booking agent. There was no evidence of any need for the restaurant items, however, or the safe. One of the returned computers that had apparently been used in his company's business the evidence suggests was an old gaming computer used by his son.
2. The total claimed cost of these items when a claim for conversion was put was a little over $6,200. I did not receive any evidence as to what use these items would have been put over the period from 1 July 2021 until December 2024 when they were returned to Mornington Resorts Pty Ltd.
3. However, the items were wrongfully retained and I accept that these items could have had a use over that period. Taking into account that some of the items were used and recognising that technology depreciates in value so the return of some of these items now might be worthless (some may now have no value and may even need to be donated for e-recycling) I assess the value of that use as 10% per annum for 3½ years (35% in total), being $1,800.
4. The purpose for awarding all damages is compensatory. Sometimes the monetary assessment of loss, where it is not capable of exact calculation or proof, involves a court or tribunal of law doing the best it can to approximate a value for the loss suffered.
5. Thus for the entire claim of detinue and conversion, I partially accept Mornington Resorts Pty Ltd's claim, but after readjustment to take into account the return of some items and matters I have just discussed, I will order payment as compensation by the OC to it in following amounts:
   • Non-returned items - $3,305 ($1,905 + $1,400) plus interest from 31 July 2021 (when these items should have been returned) until date of this order calculated at the penalty interest rate of 10% simple interest;
   • Returned items - $1,800 plus interest from 14 December 2024 until date of this order calculated at the penalty interest rate of 10% simple interest.

1. Mornington Resorts Pty Ltd's claim for economic loss is for loss alleged to have been suffered by it acting as booking manager for its lot owner customers as a result of the alleged illegality of the 'new measures' that breached rule 6 of the OC rules.
2. The claim in its final form is for an amount of $141,836 plus interest [206] for:

(a) Wages it paid its own staff to collect and hand over security key cards to the applicant lot owners' invitees up to 1 June 2022 of $81,401.88;

(b) Wages to an employee 'SC' for the period 1 July 2021 - 5 May 2022 of $41,254 plus superannuation $4,125;

(c) Wages to another employee 'JF' for the period 31 October 2021 - 23 March 2023 of $75,998 plus superannuation $7,600.

1. I dismiss Mornington Resorts Pty Ltd's claim for economic loss both on liability and on quantum.
2. On liability, primarily my reason for dismissing this claim is that there is no contractual obligation nor statutory or tortious duty of care owed by the OC to a booking agent acting for a lot owner.
3. Therefore, it matters not whether the OC might have known or intended that its conduct might cause financial loss. It is not about knowledge or foreseeability or intention but whether any duty of care or contractual obligation ever arose. The claim was not advanced as tortious interference with contractual relations (as it had been asserted in Mornington Resorts Pty Ltd's letter of demand back in 2021) and that was a forensic choice for it to make.

1. Mornington Resorts Pty Ltd's claim was framed by its amended points of claim permitted to be filed at the final hearing on 2 October 2024.
2. It alleged, and I accept, that it was registered as a manager under Pt 12 of the OC Act. I also accept that it was appointed for the purposes of s 119 of that Act as the OC's manager, following resolutions on 5 March 2014 and 22 October 2016 extending the appointment. I find that Mornington Resorts Pty Ltd's contractual appointment by the OC as manager for the OC for the relevant period in dispute was by and under the MAA it made with the OC dated 16 January 2016.[207]

1. I reject the allegation made at points of claim para 5(2) that it was 'an implied term of the MAA that, after termination of the MAA, the OC and its new manager would comply with Rule 6 while it is in effect'.
2. The implication of such a term does not meet the threshold for implication of an ad hoc contractual term established in BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] UKPCHCA 1; (1977) 180 CLR 266. It is not 'necessary' (within the meaning of that test) to give business efficacy to the MAA as a contract.
3. Under that test, no term will be implied 'in fact' if the contract is effective without it. The MAA is effective without it. While it might be said to be reasonable and equitable and capable of clear expression, the MAA itself could have said that as an express term if it was really necessary. Just because Mornington Resorts Pty Ltd accepted obligations to individual lot owners under its separate 'Apartment Management Agreements' mentioned in the MAA, it does not follow that the MAA had the implied term alleged. Such Apartment Management Agreements, although in common terms, could also according to the definition in the MAA be 'any oral or written agreement' between it and a lot owner who licensed it to manage their apartment. Those Apartment Management Agreements could therefore vary.
4. More fundamentally, the MAA had been terminated by agreement between Mornington Resorts Pty Ltd and the OC under the Terms of Settlement. That was the opportunity for ongoing post termination obligations of the parties under the MAA to be agreed.
5. In its written submissions Mornington Resorts Pty Ltd submitted at para 198-199 that:

Rule 6 forms part of the MAA between the OC and [it]. The OC owes a contractual obligation to [it], to ensure Rule 6 is complied with, whether by the OC itself or by its OC Manager. The OC's failure to appoint an OC Manager (despite lying that it did), does not absolve the OC of its obligation to [Mornington Resorts Pty Ltd] to ensure Rule 6 is complied with.

Pursuant to cl 12.3(a) of the MAA, termination does not prejudice any other rights of the parties. After termination of the MAA, Mornington Resorts Pty Ltd has a right, and the OC owes a contractual obligation to Mornington Resorts Pty Ltd, to ensure Rule 6 is complied with.

1. I reject those submissions.
2. They conflate two situations: the situation when the MAA is on foot and the situation when it is terminated.
3. When the MAA was on foot there was an ongoing performance obligation on Mornington Resorts Pty Ltd as the appointed 'Manager' to comply with the OC's rules as managing agent for the OC. That was an ongoing contractual responsibility it owed to the OC as its manager performing delegated functions, requiring it to comply with the rules in the interests of the OC's lot owner members and their Invitees. The OC owed a correlative mutual obligation not to impede compliance and to enforce the rules to enable the 'Manager' to fulfil its contractual obligations to the OC. Whether there was any implied term that the OC would not revoke that rule while the MAA was on foot, it is unnecessary to decide.
4. After the MAA ended, the contractual obligations of the parties to perform ceased. As is not uncommon, clauses like cl 12.3(a) provide expressly that the termination of a contract does not affect vested 'rights'.
5. What it means is not that there are ongoing performance obligations between the parties, but rather that rights that have vested as a result of prior performance or breach remain, unless there is a release.
6. Here, it must be remembered the Terms of Settlement separately and expressly dealt with vested rights arising from Mornington Resorts Pty Ltd performance of obligations under the MAA between the date of the Terms of Settlement and 30 June 2021 and, in relation to prior vested rights the parties gave each other mutual contractual releases.
7. Specifically, the parties agreed to terminate the MAA and for Mornington Resorts Pty Ltd to receive a sizeable payout for its early termination.
8. There is no further term to be implied in the MAA that continues to impose performance obligations on the OC or on Mornington Resorts Pty Ltd.
9. While Mornington Resorts Pty Ltd might not have anticipated the turn of events that took place, as is implicit in its own pleaded case and closing argument, Rules can be revoked and changed by an OC in accordance with the statutory power to amend rules and pass new ones. To suggest that there is an implied term to that effect that the extant rules would be observed by the OC post termination of the MAA shows how tendentious the implication of the alleged contractual term would be.
10. As I have said, the underpinning for that argument was also based on the terms of the MAA that had provided that:
    • the Apartment Management Agreements (AMA) with individual lot owners were defined in cl 1 of the MAA to mean 'any oral or written agreement between the manager and a Member pursuant to which the manager is licensed to manage any apartment' (i.e. to act as their booking manager); and
    • under that MAA there was a contractual term, cl 7.2, that the Manager must ensure that the 'behaviour and activities of members, occupants of Apartments and guests comply with the Rules' which were annexed and included rule 6.[208]
11. That adds nothing to the argument of an implied term. All cl 7.2 adds is that the Mornington Resorts Pty Ltd had agreed with the OC that while it was manager for the resort it would ensure that members and occupants complied with the Rules as then in force. All the definition of the AMA added was to show that the OC knew that the manager it had appointed was also acting for lot owners to book their lots. Those contracts were separate. As I have said, they could be oral or in writing and could obtain their own terms.

1. The second foundation of claim alleged under para 6 is said to arise from two 'duties' alleged to be owed by the OC to Mornington Resorts Pty Ltd from:

(1) The statutory duty owed pursuant to s 141 of the Owners Corporations Act 2006

(3) A duty of care owed 'due to the relationship of Mornington Resorts Pty Ltd as manager for the OC pursuant to the MAA, the proximity of it to the OC, the OC's knowledge of the AMAs [with each applicant lot owner]; and that it was reasonably foreseeable that Mornington Resorts Pty Ltd [and the other applicants] would suffer loss and damage if the OC breach Rule 6'.

1. In para 7, Mornington Resorts Pty Ltd alleges that in breach of Rule 6, the statutory duty (and the implied term of the MAA), alternatively the duty of care, the OC or alternatively its new manager 'refused and/or failed to provide security key cards to the applicants and their Invitees "Upon arrival to occupy or attend a Lot"'.
2. While I have found that the OC breached rule 6 causing loss to the applicant lot owners, it does not follow at all that such finding gives rise to the cause of actions alleged by Mornington Resorts Pty Ltd of a breach of statutory duty imposed by s 141 of the OC Act or duty of care under the tort of negligence.

Is any statutory duty owed by the OC to Mornington Resorts Pty Ltd?

1. Mornington Resorts Pty Ltd relies in its supplementary list of authorities on Stockwell v State of Victoria [2001] VSC 497, at 252-257 (Gillard J) where the Supreme Court held: (my emphasis)

1. ...In order to establish a cause of action against a defendant for breach of a statutory duty, the plaintiff has to establish -

(i) That a statutory instrument imposed a duty of care on the defendant; > > (ii) that the statutory duty of care was owed to the plaintiff; > > (iii) that the defendant breached the statutory duty; > > (iv) that a breach of the statutory duty gave a right to the plaintiff to recover damages in a civil proceeding; > > (v) that the breach of the statutory duty was a cause of the damage suffered by the plaintiff; > > (vi) that the duty rested upon an employee, agent or independent contractor of the Crown who breached it.

1. Whether or not the statute gave a civil cause of action to a person suffering damage as a result of a breach of a statutory duty, is a question of construction.
2. Justice Gillard observed that it 'is important not to confuse the question whether a statute does give a private cause of action with the failure to comply with a statutory provision, as evidence of negligence'. This was the point made by Dixon J in O'Connor v S.P. Bray Ltd [1937] HCA 18; (1937) 56 CLR 464, at 477:

It is a question of some difficulty whether a civil remedy is given to a person injured in consequence of the breach of that clause. Such a person may, of course, maintain an action of negligence and rely upon the failure to comply with the statutory regulations as evidence of negligence. But it is a different question where the enactment itself confers a distinct cause of action. The received doctrine is that when a statute prescribes in the interest of the safety of members of the public or a class of them a course of conduct and does no more than penalise a breach of its provisions, the question whether a private right of action also arises must be determined as a matter of construction. The difficulty is that in such a case the legislature has in fact expressed no intention upon the subject, and an interpretation of the statute, according to the ordinary canons of construction, will rarely yield a necessary implication positively giving a civil remedy.

1. Section 141 of the OC Act does not, by its terms, impose any 'duty of care' of the character described by Justice Gillard. It simply states who is bound by the rules of an owners corporation. The beneficiaries of those rules are those persons they are intended to benefit in the land subdivision, being the same people that owe the duties as listed in s 141 being:
   • the owners corporation
   • the lot owners
   • any lessee or sub-lessee of a lot;
   • any occupier of a lot.
2. Nor does rule 6 of the OC's rules 'prescribe' anything 'in the interest of the safety of members of the public or a class of them' (other than that the security key cards are no doubt intended to promote safety to those who may actually be issued them). Rather, rule 6, properly construed is about the use and enjoyment of interests in land by lot owners and their Invitees that attach a lot and the common property. The statutory duty owed by an OC under s 141 of the OC Act to comply with rule 6 does not extend to persons who are neither a lot owner or tenant or occupier of a lot.
3. Properly construed the statutory duty owed by an owners corporation is one owed internally to those entitled to the use and enjoyment of the land - lot owners, tenants and occupiers - not an external duty owed to third parties who are not privy to the internal management and affairs of owners corporation. Section 141 therefore does not create a statutory duty that is amenable to a claim for compensation to a third party who is none of these things. That could hardly be the legislative intention. If it were so, it would fetter the ability of an owners corporation to properly manage its internal affairs in the interests of its owners, tenants and occupiers. The content of such an amorphous duty to third parties and the consequences of any breach would be highly unpredictable.
4. In my view, the statutory duty of the owners corporation to comply with its rules is created by s 141 to serve and benefit the interests of those for which it is incorporated on creation of the plan of subdivision to benefit and to serve. If it breaches the rules and causes them loss, then that can be compensable.
5. That Mornington Resorts Pty Ltd might have once had a contractual relationship directly with the OC takes the matter no further. If properly construed it created a statutory duty to external third parties (which it does not) there is nothing in the wording of s 141 to suggest that the duty is dependant on there being a contractual relationship. It may well be the case, and often would be the case, that a contract for provision of services is made on the foundation that the parties to the contract will abide by the rules in force from time to time, but that is a matter of construction of the term of the contract not the legislative construction of the OC Act.
6. Accordingly, I reject Mornington Resorts Pty Ltd's submission that the elements outlined by Gillard J are satisfied.
   • Rule 6 did not 'impose a duty of care' on the OC;
   • It was not a 'statutory duty of care owed to Mornington Resorts Pty Ltd' or to a 'limited class of the public' that included the OC's former manager acting as a booking manager for lot owners;
   • Although rule 6 was breached by the OC and its breach may well have caused loss to Mornington Resorts Pty Ltd being loss that it might not otherwise have suffered, it was not a breach of statutory duty that gave the right to Mornington Resorts Pty Ltd as a service provider to a lot owner or lot owners to recover damages from the OC in a civil proceeding.
7. It is unnecessary to discuss the other authorities cited by Gillard J.[209] Although they are dealt with in Mornington Resorts Pty Ltd's 'Submissions in Reply' dated 25 March 2025 at [32] - [33] they take the point no further.
8. The other authorities relied on by Mornington Resorts Pty Ltd in its submission are either irrelevant or simply consistent with the point I have already made.
9. Building Services West Victoria Pty Ltd v Owners Corporation PS507524P [2022] VCAT 64 was a case where the applicant was a registered proprietor of lots within the land subdivision affected that owners corporation.
10. Kanter v Milroy Investments Australia Pty Ltd [2017] VCAT 169 was a dispute between lot owners.
11. The Owners Strata Plan No. 72250 v Letmin Pty Limited t/as Dubbo Powder Coating [2020] NSWDC 378 was a claim by an owners corporation against someone who caused damage to common property, and was a claim by the owners corporation in negligence and nuisance.[210]

Is a duty of care owed by the OC to avoid causing economic loss?

1. The final ground alleged by Mornington Resorts Pty Ltd is that the OC owed it a general duty of care to avoid economic loss.
2. That argument is also misconceived.
3. Proximity is not the touchstone of the creation of the duty. If it ever was, it has not been since 2001.[211] Nor is knowledge of contracts made between other contracting parties or reasonably foreseeability of economic loss sufficient.
4. While it may well be accepted that the categories of person to whom a duty of care might be owed has remained open and has continued to develop since the watershed case in Donoghue v Stevenson [1932] UKHL 100; [1932] AC 562 of a snail in a ginger beer bottle, as the High Court explained in Sullivan v Moody [2001] HCA 59 at [50]:[212]

[50] Different classes of case give rise to different problems in determining the existence and nature or scope, of a duty of care. Sometimes the problems may be bound up with the harm suffered by the plaintiff, as, for example, where its direct cause is the criminal conduct of some third party[28]. Sometimes they may arise because the defendant is the repository of a statutory power or discretion[29]. Sometimes they may reflect the difficulty of confining the class of persons to whom a duty may be owed within reasonable limits[30]. Sometimes they may concern the need to preserve the coherence of other legal principles, or of a statutory scheme which governs certain conduct or relationships[31]. The relevant problem will then become the focus of attention in a judicial evaluation of the factors which tend for or against a conclusion, to be arrived at as a matter of principle. In Donoghue v Stevenson, for example, Lord Buckmaster, in dissent, was concerned that, if the manufacturer in that case was liable, apart from contract or statute, to a consumer, then a person who negligently built a house might be liable, at any future time, to any person who suffered injury in consequence; a concern which later cases showed to have been far from fanciful[32]. The problem which has caused so much difficulty in relation to the extent of tortious liability in respect of negligently constructed buildings was not only foreseeable, but foreseen, in the seminal case on the law of negligence[33].

1. Whether a duty of care exists to avoid pure economic loss (which is to say, financial loss not arising from physical damage or personal injury) has been comprehensively explored in numerous cases.[213] Mallonland Pty Ltd v Advanta Seeds Pty Ltd [2024] HCA 25 ('Mallonland') is the most recent. There, in their joint decision, Gageler CJ, Gordon, Steward, Gleeson, Jagot and Beech-Jones JJ, said that the ordinary position is that a person does not owe a duty of care to avoid causing reasonably foreseeable economic loss to another.
2. While Australian courts have accepted a duty of care can arise under the tort of negligence to avoid reasonably foreseeable pure economic loss - where knowledge, control and vulnerability are present, or where a duty of care arises from an assumption of responsibility - here, as in Mallonland,[214] even though there I have found vulnerability to loss being suffered is present, 'the facts fall far short of identifying a relationship' between the OC and Mornington Resorts Pty Ltd 'that leads to the existence of a [legal] duty to take reasonable care to avoid causing the pure economic loss of the type claimed'.
3. Reasonable foreseeability is alleged by Mornington Resorts Pty Ltd under para 6(3) and 7 of its amended points of claim. In para 204 of its closing submissions Mornington Resorts Pty Ltd relies on a passage from the judgment of Gibbs J Caltex Oil at [36] where after stating that 'the fact that the loss was foreseeable is not enough to make it recoverable' under any duty, continued:

However, there are exceptional cases in which the defendant has knowledge or means of knowledge that the plaintiff individually, and not merely as a member of an unascertained class, will be likely to suffer economic loss as a consequence of his negligence, and owes the plaintiff a duty to take care not to cause him such damage by his negligent act.[215]

1. As that passage makes plain reasonable foreseeability is insufficient to establish a legal duty of care to avoid economic loss. Nor is knowledge or intention the touchstone. What is required is negligence - a failure to take reasonable care - coupled with knowledge that a particular person will suffer economic loss. Only in exceptional cases might those two things create a legal 'duty to take care not to cause him such damage by his negligent act'. That case was of course about physical damage to a pipeline resulting from negligent navigation.
2. Here the case is not concerned with any failure to take 'reasonable care'. Here the decision to instruct the manager at the reception office in control of the key cards not to issue them unless there was payment made in advance for the fee demanded was deliberately made. That such instruction on behalf of the OC was in breach of the lot owner applicant's legal rights does not mean that it was a negligent act in the sense of being a failure to take care to protect from harm their booking agent.
3. Mornington Resorts Pty Ltd sought to submit in its closing submissions in reply, which I have disregarded, that the OC's breaches of rule 6 were intentional and were intended to inflict loss and damage' on the applicants. Whether that was so or not, no case was advanced for tortious interference with contractual relations. That is a different cause of action which has its own rules and principles. It was not the basis on which the claim was advanced by Mornington Resorts Pty Ltd after being given the opportunity to amend at hearing.
4. In Teen Entertainment Enterprise Network Pty v A&H Natoli Pty Ltd [2020] VSC 388 ('Teen Entertainment'), the Supreme Court held that when cases are conducted in a manner akin to pleadings by points of claim and defence in the Tribunal, as a matter of procedural fairness to the parties to the litigation, it is incumbent on the Tribunal to not stray outside the case advanced.
5. In this case, in presiding at the final hearing, had Mornington Resorts Pty Ltd sought to re-open its case and to further amend its points of claim to allege that as an alternative cause of action after evidence and submissions had finished, I would have rejected such an application on the well established principles permitting late amendment. Mornington Resorts Pty Ltd had been given considerable indulgence during the hearing to enable it to try to put its claim for economic loss on a sound legal footing. It would have resulted in further evidence and delayed the case even further, one that had already run much longer than the parties had anticipated. The OC is an entity that serves the interests of the many owners of its 31 lots, none of whom were actual parties and some of whom had attended to listen to the hearing and observe the case being defended and counterclaim being advanced by their owners corporation. While Mr Peter Searle was no longer a practising barrister, as an experienced legal advocate he knew exactly what he was doing during the hearing to advance the interests of his company making this claim. He had a command over the evidence and was making forensic choices along the way as the evidence from witnesses unfolded and in calling for documents that had not been produced prior to the hearing by the OC or Mr Mirabito as the Chairman of its committee. But there was no application to further amend in any event and that was a choice he also made.
6. I have also disregarded Mornington Resorts Pty Ltd's submission at para 36 of its late submissions in reply. In any event they are misguided and contrary to well established legal principle and precedent. I simply note that it is well established that s 165 of the OC Act does not create any substantive remedy that gives the Tribunal authority to make any order that might be 'fair'. Rather, properly construed consistently with its purpose, it gives the Tribunal the authority, out of the legal remedies that are available under the law to be made by this Tribunal, to make such order that it considers 'fair' according to law. Section 165 itself creates no legal right or right to a remedy. Rather it authorises the Tribunal to make a fair order by way of a legally available remedy, be it under statute, in common law or under equitable principle.
7. Courts are often given similar authority as to the remedies they can order under a statute. 'Fair' in this context is well established to mean what is 'fair' according to law not under general or idiosyncratic notions divorced from legal principle. In Teen Entertainment VSC 388, Richards J discussed similar powers to make orders under the Australian Consumer Law and Fair Trading Act 2012 (Vic), s 184 and s 185 in the Tribunal's 'consumer and trader dispute' jurisdiction and held:

[36] Additional powers are conferred on the Tribunal by s 185, in relation to a 'consumer dispute' and a 'trader-trader dispute'. Those powers include a power to make any order the Tribunal considers fair. At one time, a power in these terms was thought to enable the power to be exercised by reference to 'the general principle of fairness', guided but not confined by statute and the common law.[216] It is now clear, however, that the power is more constrained.

[37] In Christ Church Grammar School v Bosnich,[217] Sifris J rejected the notion that a power to make any order the Tribunal considers fair can be exercised by reference to general notions of fairness and justice: [218]

In my opinion, although the matter is not free from difficulty, the tribunal is required, when deciding the merits of a case, to apply the law and not merely be guided by it. Any flexibility relates only to the form of the order and of course, to procedural and evidential matters. If this was not the case absurd results could follow. To the extent that the Supreme Court of Victoria has concurrent jurisdiction different results could follow. The court, not having the benefit of s 109, would have to apply the law while the tribunal could do what it considered fair even if the law was to the contrary. Further, such a result would encourage idiosyncratic notions of fairness and justice. If the intention was to exclude the operation of the law (as a matter of substance and not merely procedure or form) a specific section to such effect, clear and unambiguous, should have been inserted.

[38] This approach has since been taken by other judges of this Court, in relation to similarly broad powers conferred on the Tribunal by other enabling legislation.[219] A power to make any order the Tribunal considers fair must be exercised in accordance with law.

[39] In my view, the same constraint applies to the Tribunal's powers under s 184 of the Fair Trading Act, for the reasons given by Sifris J in Bosnich. While the Tribunal has very considerable flexibility as to the form of its orders, it may only make an order under s 184 where there is some legal basis for doing so.

1. This was discussed by the Tribunal in Owners Corporation 1 Plan No. PS735439F v Singh (Owners Corporations) [2022] VCAT 389 where, after discussing the decision of Justice Sifris itself, the Tribunal also endorsed the Anstat commentary on the topic, which has been in publication for many years, observing:

[30] ...in the current Anstat annotation of the OC Act, the authors of which are Members in various capacities of this Tribunal, in their commentary, in citing Justice Sifris, ... state: (emphasis added)

[165.01] The Tribunal is not confined to making an order that fits into one of the categories listed in the sub-paragraphs ... when determining an owners corporation dispute. It may make any order it considers fair.

The Tribunal's power to make any order it considers fair does not entitle it to ignore the law. The Tribunal's obligation is to hear and determine the dispute according to law. Once it determines that the applicant is entitled as a matter of law to a remedy, having made out a cause of action (a legally maintainable claim) made available under the Act or otherwise known to the law, the Tribunal in exercise of its power under s 165(1) has flexibility in fashioning an appropriate order to achieve the remedy....

The Tribunal's power to make any order it considers fair includes a power not to make any order at all if, if in all the circumstances, it considers it fair not to make any order.

[31] What this means is that if the owners corporation dispute involves an issue of the Tribunal making a determination about legal rights or obligations under the underlying general law - which is to say the common law, equity or applicable statutory provisions (including the OC Act itself) - then the section empowers the Tribunal to make orders derived from the underlying general law, which is to say applicable common law, equitable and statutory remedies.

1. In Energy Technology Australia Pty Ltd v Owners Corporation PS 439401J [2017] VSC 145 at [75], (a case cited by Justice Richards in Teen Entertainment) the same point was made by Daly AsJ:

'the Tribunal can only apply a remedy if there is a right which can be identified: s 165 does not empower the Tribunal to act "at large".

1. As I have said, I have rejected Mornington Resorts Pty Ltd's claim for economic loss on a separate basis. Even if it had made out good a cause of action for breach, it has not substantiated its loss and damage.
2. On the evidence, it is apparent that it was not making any profit in conducting its rental business after its services as manager for the entire resort and OC manager were terminated, and it did not contend that it was.
3. Byron Searle's gave evidence in his witness statement[220] that as a result of the new measure of charging induction fees and requiring payment in advance that:

In order to honour bookings made by Mornington Resorts Pty Ltd on behalf of [Byron, Ursula and Michael], and give key cards to [their] invitees' it had 'had no choice but to continue employing [SC] full time from July, 2021 until her resignation on 5 May, 2022.

[SC's] principal duty and reason for employment from July 2021 to 5 May 2022, was giving prior written notice of arrival to the OC and giving the Applicants' invitees key cards which the OC refused to give to the owners' invitees unless "induction fees" were paid to the OC's agent in advance.

Instead of giving key cards to my invitees and the invitees of the Second and Third Applicants, the OC made the invitees wait until an MR [Mornington Resorts Pty Ltd] employee attended on site to give an OC key card to the Applicants' invitees.

1. The 'loss' claimed[221] by Mornington Resorts Pty Ltd is for wages for two employees,[222] totalling $141,836. Mathematically, $41,254 (plus superannuation $4,125) + $75,998 (plus superannuation $7,600) = $128,977. The discrepancy claimed as loss and damage is GST, but there is no explanation for why GST was paid on wages to employees and these were not costs that were passed on to the customer: no evidence was led that the applicant lot owners were in any way to be responsible to Mornington Resorts Pty Ltd for these wages personally and it was not suggested that they were.
2. While, as I have said in assessing the earlier damages claims, the assessment of loss and damage by courts and tribunals can sometimes be a matter of estimation or pragmatic impression rather than an exact science,[223] that principle has its well-established limits.[224] If the monetary loss claimed to have been suffered is capable of proof through evidence, proper evidence is required to prove it. The onus of proof is on the applicant claiming it.
3. In this case there is an absence of proper evidence on which any meaningful assessment of the financial loss that might actually have been suffered by Mornington Resorts Pty Ltd can be made so as to be compensable under principles for the assessment of loss and the award of damages, whether under contract or tort or breach of statutory duty. That evidence was available.
4. Mornington Resorts Pty Ltd submitted [225] that 'it would have been nearly impossible to attempt [for Mornington Resorts Pty Ltd] to employ casual staff or others to reliably give key cards to invitees to the invitees of the [lot owner] applicants, due to scarcity of casual staff at Portsea, COVID, and that fact that SC and JF were already fully trained by Mornington Resorts Pty Ltd in all aspects of the OC Rules, key card, reception, COVID and booking systems'. While I accept there might have been some difficulties finding someone else locally, I simply cannot accept that for the entire duration of the claim, other real estate agents or casual staff were simply unavailable to assist Mornington Resorts Pty Ltd with this task of welcoming guests to the resort. There is also no evidence of any inquiries being made about any such alternatives.
5. While I accept these wages costs were incurred by Mornington Resorts Pty Ltd, the claim it advanced is for economic loss. The evidence does not show that it would not also incurred these losses even if the impugned 'induction fee' had not been charged or reception office attendance to collect the keys were not adding extra work. Rather, there is a likelihood that it would have incurred these costs to a large, if not complete, extent in any event.
6. Mornington Resorts Pty Ltd's staff's attendance to give keys to invitees was not all its staff did in acting as booking agent for its lot owner customers. To welcome guests of its lot owners they must necessarily have done much more, both in making the booking, collecting the money, issuing a receipt, paying the rental to its lot owner customers, and welcoming the guests to the resort to mention some more obvious tasks involved in providing a service of this nature. Mornington Resorts Pty Ltd is not entitled to compensation for the cost of providing those agency services to its customers and their guests.
7. The notion that when a paying guest arrives at a 'resort', all that is necessary by way of service is that they be given a security key card at the reception desk, is simply quite unreal. Mornington Resorts Pty Ltd's own evidence was that the service it actually provided extended to putting a porta cot in a room, and showing the guest to their room on arrival. The services its employees were performing were necessarily much more than simply paying the induction fee to Portsea Village Resort Pty Ltd and collecting the key from staff on reception desk.
8. There is no breakdown of its costs of these different tasks. It is not for the Tribunal to guess that. Much if not all of what was claimed as wages cost may well have been a cost to Mornington Resorts Pty Ltd in any event. That is not the sort of pragmatic impression that is permitted in the assessment of loss and damage where evidence is available to prove actual loss.
9. This is not a case where the lot owners affected by the impugned 'induction fee' had been charged additional fees by Mornington Resorts Pty Ltd for providing its extra services. They, as lot owners, did not seek compensation for any such loss against the OC. And that is not Mornington Resorts Pty Ltd's claim in these legal proceedings in its amended points of claim.
10. There is also the impression that the services that Mr Peter Searle's company continued to provide his children and Mr Abell through his company were as much out of a sense of personal responsibility between father and children and to a former lot long time lot owner. While I accept these alternative arrangements needed to be put in place at this time somehow for them, it is necessary in legal proceedings for a party claiming loss and damage to establish the actual loss and damage they suffered as a result of the breach of duty or responsibility they allege. Mornington Resorts Pty Ltd has not established that on the evidence in this case.
11. On these grounds I dismiss its claim for economic loss even though I have found that the OC breached the OC's Rules.

1. I also reject Mornington Resorts Pty Ltd's application in closing submissions for an order from the Tribunal to set aside the 'costs orders' made against it on 2 October 2024 and on 3 October 2024 fixing those costs and ordering a time for payment.
2. Those costs orders were made as a condition of Mornington Resorts Pty Ltd to being given leave to 're-plead' its case principally to address difficulties with the legal foundation of its claim for economic loss.
3. Mr Peter Searle, representing his company, took up that opportunity and amended his company's points of claim. Those costs orders were made to compensate the OC for unnecessary costs to the OC thrown away by reason of that late amendment, for which it was fair that it be compensated. They were assessed at that time and ordered to be made while the issue was fresh. It was a straight forward exercise of discretion,
4. There is no proper basis or reason for the Tribunal to revisit those costs orders even if the Tribunal had the power to do so.
5. The Tribunal does not have the power to do so. The Tribunal is functus officio in regard to those costs orders. If orders were made in legal error, Mornington Resorts Pty Ltd had the right to appeal to the Supreme Court under s 148 of the VCAT Act. Mornington Resorts Pty Ltd did not do that and nor did it seek any stay of the time for payment of costs pending any appeal under s 149.
6. The Tribunal only has very limited power to re-open its orders.
7. In The Big Apple Group Pty Ltd v Melbourne City Council [2020] VSC 393 ('Big Apple') (Ginanne J) the Supreme Court held in regard to orders made by 'consent':

[41] ...the VCAT Act does not empower the Tribunal to conduct a collateral review of its previous decision to make Consent Orders, when the Tribunal has asked to make them by the parties because they have settled the proceeding or reached an agreement to do so. When the Tribunal is so requested, ... the jurisdictional fact or precondition for the exercise of the s 93 power is established. Sections 119 and 120 are two clear, but limited, [226] exceptions which provide the Tribunal with power to reconsider previous orders.

No implied or inherent power to set aside an order made under s 93

[51] I do not accept that the Tribunal has an inherent power to strike out and subsequently correct a wrong decision, even if it has identified an error: [Fishlock v State of Victoria [2016] VCAT 1214 (Senior Member Steele) and Willner v City of Melbourne [2016] VCAT 154 (Garde J)].That is a role of this Court exercising appellate powers from orders of VCAT.

[52] Nor can such a power be implied. The Tribunal is a statutory body and does not have the inherent or implied powers possessed by this Court. The Big Apple relied on the New South Wales Court of Appeal decision in Logwon Pty Ltd v Warringah Shire Council ('Logwon'), for the proposition that bodies created by statute, in that case the Land and Environment Court, possessed an implied power to set aside their own orders. But that Court was a superior court, although of limited jurisdiction. It therefore had the inherent powers of a Supreme Court including the right to set aside its own orders.

[59] ... the Tribunal had no jurisdiction to conduct a collateral review of the validity of the Consent Orders and the Tribunal possessed jurisdiction to make those Consent Orders under s 93(1). The Consent Orders remain in operation and the Tribunal is functus officio in the proceeding in which they were made.

1. That case concerned 'consent' orders but the principle applies a fortiori to orders made after 'hearing and determination' of an application and extends to interlocutory determinative orders of the Tribunal.
2. While the Tribunal does have power to exercise a procedural discretion afresh, for example to allow further amendment of a claim or defence if it is in the interests of justice,[227] it does not have any general power to reconsider or review a previous order made following adjudication of an application on its merits. That, legally, is fundamentally different.
3. As the editors of Pizer observe at [VCAT.120.40], answering the question 'Section 120(1) - when can an application for review be made?':

'... VCAT's power to set aside an order 'depends on the proper construction of its statutory powers. Section 120 is the main statutory power by which ... VCAT may set aside its own orders. Unlike the Supreme Court of Victoria, VCAT cannot resort to any inherent jurisdiction to recall its own judgment or order': Lockwood v Ecoliv Buildings Pty Ltd [2017] VSC 109 at [75].

1. Another authority on this question is the decision of the Court of Appeal in Director of Public Prosecutions (Vic) v Edwards [2012] VSCA 293; (2012) 44 VR 114 ('Edwards'). It held that even where a court makes a decision under a statutory power and commits a jurisdictional error, it remains functus officio.
2. Accordingly, both Edwards and Big Apple are determinative of the question and bind the Tribunal. Mornington Resorts Pty Ltd's application to reopen the costs orders made against it must be dismissed on the basis that the Tribunal lacks jurisdiction to review, reopen or set aside those orders.
3. Even if the Tribunal had the power to revisit those orders, there is no merit to the application. I note that Mr Vincendese, the solicitor at Best Hooper acting for the OC, filed a further affidavit dated 25 February 2025 about those costs orders made by the Tribunal on 2 and 3 October 2024.[228] The order against Mornington Resorts Pty Ltd to pay the OC's costs thrown away by reason of the amendment was a condition[229] of the order granting it leave to amend under s 127 of the VCAT Act. It was also determined by the Tribunal to be fair that the OC not be out of pocket from the delay and additional cost that the late amendment caused at that time.
4. I also mention this. An underlying policy served by the doctrine of functus officio is not just jurisdictional so as to prevent a decision maker (such as a judge or tribunal or administrative body) having performed its determinative function from revisiting or changing its decision, it also brings about certainty for parties which is an element of procedural fairness. It brings finality to litigation by preventing re-litigation of the same issue, which is both in the public interest and serves the private interests of the parties.

COUNTERCLAIM BY THE OC AGAINST MORNINGTON RESORTS -OC1321/2022

1. As I have said, the counterclaim by the OC against Mornington Resorts Pty Ltd spans 6 years before the commencement of proceedings. As labelled and described in Counsel's submissions, it comprised the following:

1. As mentioned, the 'Maintenance works claim', 'Caretaker accommodation claim' and 'Restaurant business' claim were abandoned after evidence had been presented, and an amendment was made to the OC's points of counterclaim to take them out.
2. Those counterclaims made by the OC are therefore dismissed on that basis.
3. I have rejected its remaining counterclaims for three main reasons.
4. First, I dismiss them on the basis of the contractual release given by the OC under the Terms of Settlement dated 14 May 2021. For good consideration, that contract properly construed released and forever discharged Mornington Resorts Pty Ltd from all the counterclaims now brought, by cl 9 of that settlement contract.[230]
5. Second, I also accept Mornington Resorts Pty Ltd's submission that the counterclaims that were pursued are properly to be dismissed on their merits for two reasons, which I shall explain.
6. As I have also mentioned, the OC had originally made an allegation of dishonesty against Mornington Resorts Pty Ltd, which was not ultimately pressed after the evidence had been given. It arose in the following context. In Counsel's opening of the OC's counterclaim on 8 October 2024 - on the allegations of breach of so called 'contractual duty' and 'statutory duty' that had been alleged in the points of counterclaim dated 2 October 2024 - the Tribunal queried how the allegation of breach of s 122(1)(c) of the OC Act particularised in para 4.2 of the counterclaim was put. That section imposes a statutory duty on a manager appointed by the OC that they 'must not make improper use of the manager's position to gain, directly or indirectly an advantage personally or for any other person'.
7. Counsel for the OC said: 'we say there's been a contravention of s 122(1)(c) because it might be an improper use in its position'. Then, after opening some of the evidence about the diving school business claim, Counsel said:

this was not an open exercise with full knowledge and agreement of all lot owners. To the contrary. The contemporaneous documents, the email that I have just referred to, showed there was a fabrication. That's one of the reasons we say there has been contravention of the Act in respect of this part of the counterclaim ... Clearly, he did that as a fabrication ...'.[231]

1. No allegations of dishonesty were ultimately pressed by the OC. The opened allegation was withdrawn by Counsel for the OC on the Tuesday morning of day 7 of the final hearing.[232]

1. The Terms of Settlement reached after a mediation between the OC and Mornington Resorts Pty Ltd on 14 May 2021 are set out earlier.[233]
2. Their opening paragraphs contain an agreed chronology of some of the events leading up to it.
3. The document is signed under the common seal of the OC affixed and attested to under the signature of John Mirabito as 'OC CHAIRMAN' and Doug Cox as 'OC SECRETARY'.[234] It was executed by Mornington Resorts Pty Ltd by its sole director and secretary Mr Peter Searle. The OC later approved it at an EGM in June 2021.
4. Clause 9 states:

Subject to these terms, the parties release and forever discharge one another from all actions, claims, demands, costs, expenses, damages, proceedings, and all loss and liability arising out of or in connection with any matter in dispute referred to in the Recitals.

1. The interpretative principles to apply to contractual releases are settled.[235] Giving cl 9 its natural and ordinary meaning, objectively read it covers the OC's counterclaims against Mornington Resorts Pty Ltd. The counterclaims are self-evidently 'actions, claims, demands, costs, expenses, damages, proceedings, and ... loss and liability'. They are also self-evidently such things 'arising out of or in connection with any matter in dispute referred to in the Recitals'.
   1. The Recitals describe the matters in dispute in general terms.
      • Recital C refers to there having arisen 'Disputes and differences ... between the OC and MR in relation to the MAA' and to the OC having claimed that 'Mornington Resorts Pty Ltd has breached its obligations set out in the MAA';
      • Recital F refers to Mornington Resorts stating that it 'denies ... it has breached the MAA'; and
      • Recital G refers to the parties having agreed that: 'To avoid the time and expense of litigation, ... to settle the disputes between them on the terms set out in these Terms of Settlement'.
2. Considering the wide expression of the Recitals, the general words in the release clause are not qualified. There is no occasion to read down the general words in the release clause.
3. Any limitation to that general release in cl 9 was stated to be elsewhere in the agreement to settle: 'Subject to these terms'. There was no carve out or limitation on that general and mutual release.
4. It is not possible to identify, and would have been impractical to specify, every issue that was in dispute. The Recitals when read as a whole and in the context of the 'genesis'[236] of the dispute that had emanated from allegations by the OC of Mornington Resorts Pty Ltd having conflicts of interest and duty to the OC, demonstrate what was in the contemplation of the parties at the time when the release was given.[237] The evidence the Tribunal also received at the hearing was of deep suspicion held by Mr Mirabito and many things been alleged and said.
5. However, confining the analysis to the contractual language agreed upon, when one looks at the wording agreed to by the parties, their contract to settle describes three matters in the header, being 'in the matter of':
   • the OC,
   • the MAA, and
   • a mediation of a dispute under cl 16 of the MAA,

as being covered by the 'terms of settlement' agreed between the parties.

1. The OC, in its submission about the proper construction of the release clause, seeks to confine the release as covering only what was alleged in the Notice of Dispute dated 9 March 2021 and Notice of Default dated 20 April 2021, being referred to in recitals D and E.[238]
2. But that is highly artificial.
3. Recital C to the Terms of Settlement specially mentions both 'disputes and differences have arisen ... in relation to the MAA' and that it had alleged that Mornington Resorts Pty Ltd had 'breached its obligations set out in the MAA'.
4. What, factually, accompanied those notices sent by the OC (referred to in Recitals D and E) were was also covering solicitors' letters referencing disputes and differences between the parties.[239]
5. On 5 May 2021, Mornington Resorts Pty Ltd had also sent its Response to the Default Notice[240] in which it stated amongst other things:

We deny all of your alleged failures to perform and observe the provisions of the MAA.

Your allegations are vague and uncertain, and do not allege specific breaches. You have also attempted to imply or allege duties which are not included in the MAA.

In conclusion, MR is not in breach of the terms of the MAA ...

1. It is thus patent that whether Mornington Resorts Pty Ltd was in breach of the MAA or its duties as Manager under that contract, was what the mediation between the parties was about and what it would resolve if an agreement was able to be made to settle their disputes and differences.
2. Mr Abell who had been a longstanding lot owner well before Mornington Resorts Pty Ltd was appointed by the OC, and who I regard to be an independent witness and whose evidence was not seriously contradicted by anyone and, indeed, was supported by many witnesses, said this in his witness statement[241] dated 28 August 2024, at para 3-7.

I bought apartment 107 at Portsea Village Resort thirty years ago and was a member of the Body Corporate PS302397L ("OC") until this month.

Between 1 July 2014 and 30 June 2021, [Mornington Resorts Pty Ltd] ("MR") managed the OC and Portsea Village Resort. During that period, MR successfully rebuilt and repaired the common property, accommodation revenue and restaurant, with excellent online reviews, feedback and 4 or 5 star ratings. The increased goodwill and reputation of Portsea Village Resort led to the successful settlement of my apartment 107 for about double the amount I could have obtained in 2014, when MR started managing Portsea Village Resort.

Despite MR's successful management of the OC, on 9 March 2021 the OC served on MR a Notice of Dispute for compulsory mediation pursuant to clause 16.2 of the MAA ...