A high-end Kingston serviced-apartment complex could be banned from accepting guests after a tribunal found it was operating in breach of its lease conditions.
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In a major win for the ACT's hotels' association, the ACT Civil and Administrative Tribunal has ruled Knightsbridge Canberra is a commercial accommodation operation, a use which isn't permitted under the crown lease for its Leichhardt Street site.
The tribunal has ordered the owners be issued with a "controlled activity order", which essentially means Knightsbridge must stop operating as a defacto hotel.
Knightsbridge's owners should be given six weeks to "reorganise" its operation after the order is served.
While the exact wording and scope of the order is still being worked through, the tribunal has made clear that of all the options open to the owners, "continuing to breach the crown lease ... is not one of them".
The verdict overturns a decision made by the ACT planning authority, which had cleared Knightsbridge of operating in breach of its approvals in October last year.
The tribunal was critical of the authority's conduct, saying its investigation into Knightsbridge's operation "can best be described as minimal".
The investigation was prompted by a complaint from the Australian Hotels Association ACT branch, which alleged Knightsbridge's owner, Quanton Pty Ltd, was using the land for a commercial purpose, despite only residential uses being allowed under the crown lease and planning approvals for the site.
Quanton Pty Ltd is a subsidiary of Consolidated Builders Limited, whose managing director is prominent Canberra developer Josip Zivko.
The crown lease granted to Quanton Pty Ltd required the land be used for "multi-unit housing".
The corner block also sits inside a RZ5 zone, which prohibits commercial accommodation uses.
Despite the planning and lease requirements, the complex has since 2017 been used for "luxury accommodation", offering guests high-end serviced apartments and access to an on-site gym and swimming pool.
The hotels association's ACT general manager, Anthony Brierley, said last year that allowing Knightsbridge to keep operating would set a precedent that meant any building could be turned into a hotel, without being subject to necessary approvals and oversight.
The planning authority issued Mr Zivko's company with a notice to explain why it shouldn't be issued with a controlled activity order.
The owners challenged the order, arguing the Kingston site was being used for multi-unit housing as required under the crown lease. They contended the lines between "residential use" and "commercial accommodation use" were not clearly defined under ACT planning laws.
They also argued their rooms were not exclusively offered on a short-term basis, as a number of guests had stayed for months at a time. That meant Knightsbridge didn't meet the definition for commercial accommodation, they argued.
The planning authority sided with Knightsbridge and decided not to issue the order.
The hotels' association launched an appeal against that decision in November last year, arguing its case against both the government's solicitors and Knightsbridge's lawyers at a hearing in mid March.
In a 37-page judgement handed down this month, the tribunal ruled Knightsbridge was not being used for "predominantly residential" purposes, which meant it was in breach of its crown lease conditions.
The tribunal cited numerous facts to prove that Knightsbridge was being run as a commercial accommodation business, including that it advertised itself as providing serviced apartments, offered overnight bookings and one of its 56 units had been converted into a reception area.
The hotels' association had also pointed out that Knightsbridge was on booking websites such as Trivago.
As part of its defence, Knightsbridge's lawyers produced evidence of "many other" serviced apartment complexes that were operating on residential land across Canberra.
The tribunal shot down that argument, which it dubbed the "but everyone else is doing it defence".
It said that if there were in fact other examples in Canberra, then it was important to sanction Knightsbridge as a "matter of public policy and to support orderly development in the territory".
'When all of the above factors are weighed up we consider on balance the public interest and integrity of the planning system in the ACT both lead to a conclusion that the correct and preferable decision is to make a controlled activity order," the judgement read.
The tribunal ordered the ACT planning authority to provide the hotels' association and Knightsbridge with a draft controlled activity order by Tuesday this week. The parties have until Friday to provide feedback on the scope of the order.
Mr Brierley described the tribunal's ruling as a "victory for common sense".
He said it was regrettable the ACT government had felt the need to spend taxpayers' money fighting the case.
He also took aim at the planning authority.
"The judgment shows that it is the planning directorate, rather than the planning system per se, that is in need of review," it said.
The directorate did not respond to The Canberra Times' questions about the judgement, including whether it planned to appeal the decision.
In a statement, a spokesman simply said: "ACAT has not yet made final orders and has requested submissions from parties. The government will consider the final orders".
Mr Zivko's spokeswoman declined to comment.
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Dan Jervis-Bardy
Dan covers federal politics from Parliament House, with a special focus on climate policy and the NDIS. He has previously reported on ACT politics and urban affairs since joining the Canberra Times in 2018.
Dan covers federal politics from Parliament House, with a special focus on climate policy and the NDIS. He has previously reported on ACT politics and urban affairs since joining the Canberra Times in 2018.
