Paul Salter's Docklands Executive Apartments is fighting a VCAT case brought by the Watergate residential building's owner's corporation in Docklands, which claim short-stay guests, have parties, are unruly, and damage property.

Nine apartment owners are at the centre of the case, which is the latest in a four-year legal saga between owner-occupiers and renters and those who lease their apartments through increasing popular brokering websites such as Airbnb and Couchsurfing.

Mr Salter brokers nine apartments in the Watergate building. His lawyer, David Fairweather, argued before Member Linda Rowland that there was no evidence that short-term guests were problematic and to bar them from leasing a property for a couple of days was discrimination.

He likened it to red-haired people being barred from doing something because of the colour of their hair.

He also argued that an owner's corporation does not have the power to prevent an apartment owner from using their property as a business.

Tim Margetts, who represented the owner's corporation, said multiple owner's corporation rules have been broken, including failing to notify the building manager of new tenants and moving property around.

He told the tribunal that the owner's corporation had a right to stop an apartment owner from running their property as a for-profit business.

Short-term accommodation has boomed in recent years. There are currently more than 1000 Docklands apartments available for short-term lease on Airbnb.

Complaints from neighbours have also increased and the Andrews Government has pledged to clamp down on short-stay apartments in residential properties and set up a seven-person panel to look into the issue and consider whether any further regulation is needed.

Earlier, Minister for Consumer Affairs Jane Garrett said: "We need to find the right balance and the panel will take a common sense and practical approach to minimise disruption."

The VCAT case is the latest legal twist in the on-going saga that kicked off in 2012 when the Building Appeals Board backed a council ban on short stays in the 350-apartment Watergate tower on the grounds they breached national building codes.

In November, Melbourne City Council failed to stop the practice after it spent more than $346,000 in legal bills in its bid to set a national precedent to curb rogue apartment owners. However, the Building Appeals Board found in favour of Mr Salter, who agreed to install extra smoke alarms and emergency exit signs on units his group manages.

Other owners corporations have been more successful in challenging short-stay operators, including a Southbank building which won its VCAT case last year after residents complained of noise and disruptive behaviour.