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In a block of 5 units 2 have driveways facing the street . The other 3 enter via a central driveway with security gates . one of the street facing unit owners says that because he derives no benefit from the gate and central driveway he should not be liable for any maintenance costs under Section 28 of the Owners Corporation Act 2006 . Is he correct ?
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OWNERS CORPORATIONS ACT 2006 – SECT 28
Liability of lot owners(1) The owners for the time being and any purchaser in possession of, 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.
(2) 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 a liability of the owners corporation exceeding the lot owner’s lot liability.
(3) Subsection (2) does not apply to an amount payable to an owners corporation for repairs, maintenance or other works that are undertaken by the owners corporation on common property or a lot and which are wholly or substantially for the benefit of some or one, but not all, of the lots affected by the owners corporation.
Is there a gate on the two individual driveways? Do all the gates (or just the central gate if that is all there is) restrict access to the common property and thereby increase the security of the common property?
If security is increased by restricting access to the common property, then there is a benefit to all and the cost should be shared by all.
If there are security gates on the individual driveways as well and those are common property, then it makes sense for the whole OC to maintain all three gates. The alternative would be for two owners to be fully responsible for one gate each. Even if the owners with individual drives do not care to use the common property behind the central gate, I presume they could if they (or another owner of their unit) wanted to. In that case, they also gain a (potential) benefit from the gate and should pay their share.
I would expect (from another jurisdiction, not Victoria) that the OC generally pays for common property stuff. Where I am some units have their private driveways directly off the public road whereas other units connect to sections of road on common property. Maintenance of the sections of road on common property was always an OC cost, even though a subset of owners might only walk on it sometimes but are unlikely to have a reason to drive that way.
This is the “Benefit Principle” which exists in Victoria. That lot owners that benefit more from certain OC works could pay more.
Sections 23, 24, 28 and 53 of the OC Act (Victoria) relate to it.
S. 28 only confirms that an OC has the right to use the “Benefit Principle”. But in practice, applying the “Benefit Principle” is dependent on how the works are funded.
S.23 (3A) specifically rules out applying the “Benefit Principle” for ordinary annual budgets and the ordinary levies used to fund them. This would include long term maintenance funding in the annual budget.
S.24 (2A) and s.53 (1B) specifically rule in the “Benefit Principle” for extraordinary expenditure or certain upgrading works and the special levies used to fund them.
The bottom line is that it’s only when a special levy is struck that the “Benefit Principle” can be considered. And even then it must be considered with caution.
Some VCAT guidance on how to use it is here, from part 16:
http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/vic/VCAT/2017/1550.html
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