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Topic
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Dear Forum Members and Experts,
I seek your expertise on an issue pertaining to the ‘Benefit Principle’ as it applies to a retail space, specifically focusing on the internal toilets. The question arises: Can the ‘Benefit Principle’ be invoked if a tenant asserts non-use of the communal restroom facilities?
To provide additional context, the retail space in question is leased by a single tenant who has fulfilled the Lot Liability payments as per the subdivision plan’s proportionate allocation of expenses for the last 10 years
I appreciate any insights or guidance you could offer on this matter. Thank you for your time and assistance.
Kind regards
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I assume you are in Victoria. Correct? The reason I say this is that the Benefit Principle – whereby owners who don’t benefit from items or work paid for out of strata funds, don’t have to contribute towards them – applies in Victoria but not in NSW.
Also, you posted the same question in two different threads in this Forum – that’s not allowed and your other post has been deleted.
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I am also in Victoria – in a block of 24 flats but 3 separate roofs ( 6 units /9 units/9 units per roof) can owners really decide to not contribute to to the “other areas”?
FYI: This is a reference to the benefit principle in the Victoria Owners Corporation Act
49 Cost of repairs, maintenance or other works
(1) An owners corporation may recover as a debt the cost of repairs, maintenance or other works undertaken wholly or substantially for the benefit of one or some, but not all, of the lots affected by the owners corporation from the lot owners.
(2) The amount payable by the lot owners is to be calculated on the basis that the lot owner of the lot that benefits more pays more.
(3) The works referred to in this section may be to the common property or a lot.
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The Benefit Principle may be applied in three different circumstances:
1. Section 23 (3A&B) allows an annual budget expense, normally paid based on lot liability, to be based on benefit. This does not relate to just maintenance but includes use and only in the circumstance where lot liability is not adequate.
2. Section 24 (2A) relates to where a special levy is to be raised for planned repairs, maintenance or other work, the benefit principle is to be considered.
3. Section 48 relates to where the OC has done the work and now recovers as a debt from the lot or lots that benefit from that work. It is often associated with Section 49 – Notice of Repair.
So, for the first example of toilet use, there is a difference between the lot having access to the common toilet facility and the lot opting not to use the common property toilet. For latter to be considered the access would have to be removed so the occupier of the lot or their guests could not access the toilet permanently. If the toilet could not be isolated, then the benefit (or lack of benefit ) is not established.
Then when compiling the annual budget, the cleaning, consumables, repairs and maintenance costs associated with the common property would be removed from the budget and raised as additional annual levy to those lots that benefit from the toilet as per Section 23.
Alternatively the OC could lease (special resolution) to the lots who benefit from the toilet and assign all costs to the lease holder.
In the second example for roof replacement, Section 24 would be used especially if a special levy is to be raised, which triggers the requirement to consider the benefit principle. If the amount to repair the roof is more than twice the budget then a special resolution will also be required.
Please note that the threshold test for applying the benefit principle is “some but not all” and in most cases all lots benefit from works to common property. So apply sparingly, it’s a slippery slope that can get out of control very quickly.