Strata Title Lawyers.
Australia’s leading
provider in Owners
Corporation Law.

 

Our Services

As a specialist strata law firm, we have developed our range of services to cater for all of the legal needs of a unit owner or owners corporation in New South Wales and Victoria. We don’t act for builders or developers, so you’ll never have a conflict of interest working with us.

STL provides an expert view in reviewing the validity and enforceability of Service Agreements entered into by the Owners Corporation when the Developer was still in control of the development.

We also draft and negotiate new agreements on behalf of the Owners Corporation, to redress the imbalance between service providers and the Owners Corporation. 

If the Owners Corporation is in dispute with an owner or resident, we can assist in resolving the dispute through a range of legal and non-legal processes including negotiation, mediation, Tribunal adjudication or through the filing of Court proceedings.

Suffering from water ingress, mould or cracking walls? An Owners Corporation has a strict statutory duty to maintain and repair common property. But where are the boundaries between the common property and lot property responsibilities? STL can assist in diagnosing an Owners Corporations’ responsibilities and liabilities to carry out repairs and compensate owners for loss of rent and diminution of value.

Renovating your unit? Problems with visitor parking in the car park? Smoking residents upsetting your quiet peace and enjoyment? You’ll need a by-law to regulate the use of common property and lot property in almost all facets of strata living. We have a large range of precedent by-laws to choose from. Call us for a premium by-law at a competitive price, starting at $400 plus GST.

An Owners Corporation has only very limited timeframes to enforce the builder or developer to fix original building defects. The best time to commence a defect claim is as soon as the defects start to appear. STL can assist an OC to diagnose its options in identifying and rectifying defects and works closely with industry-leading experts to get fast and first-class results.

We offer advocacy and representation to Unit owners and Owners Corporations in the compulsory government-prescribed Mediation processes in NSW and Victoria. 

As an alternative to the government department controlled mediations, STL offer tailored and ‘active’ mediation services to strata communities in need of fast resolution of issues. Tom Bacon is an accredited Mediator with LEADR and is trained in using the Harvard Model of Mediation.

STL specialise in acting for Owners Corporations in making submissions to Local Council regarding development applications affecting strata communities, and we can also assist in preparing DA Applications through Council approval and in the Land and Environment Court.

Strata title has been around as a form of tenure for over 50 years, and some buildings are much older than this again. As these buildings reach the end of their useful lives, Owners Corporations need to think about whether re-development is desirable or necessary. STL is experienced in assisting owners with the legal steps involved in re-developing buildings in Sydney and in Melbourne.

About Us

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Tom Bacon - Strata Title Lawyers
Tom Bacon - Strata Title Lawyers
Kerrie Williams - Strata Title Lawyers
Kerrie Williams - Strata Title Lawyers
Vivien Hodges - Strata Title Lawyers
Vivien Hodges - Strata Title Lawyers
Ciro Figaro - Strata Title Lawyers
Ciro Figaro - Strata Title Lawyers
David Kennelly - Strata Title Lawyers
David Kennelly - Strata Title Lawyers
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Tom Bacon

CEO and Principal Lawyer

Tom holds a Bachelor of Laws and a Bachelor of Arts (Political Science) from the University of Auckland and practices exclusively in strata and community title law. He is an accredited mediator and a leader in the field of resolution of strata and community disputes and has acted for owners corporations and unit owners in some of the most significant strata law cases in Australia in recent times.

Tom has also practiced as a Barrister and Solicitor in environment law, building law and insurance law, acting for government clients in a range of appeals, prosecutions, administrative law reviews and declarations in New Zealand’s superior courts.

Tom can be contacted by email at tom@stratatitlelawyers.com.au or by telephone 02 9091 8068.

Kerrie Williams

Associate Lawyer

Kerrie holds a Masters Of Law & Legal Practice from UTS and a Bachelors of Psychology from Macquarie University. Kerrie joined STL in April 2016 specialising in civil and commercial disputes involving Owners Corporations and advises on a range of contentious and non-contentious matters regarding contracts, leases, easements, licences, by-laws and building service agreements. 

Kerrie has previously worked in the Office of the NSW Attorney - General and in boutique law firms and brings a wealth of experience in managing and resolving complex multi-party and multidisciplinary issues.

Kerrie can be contacted by email at kerrie@stratatitlelawyers.com.au or by telephone on 02 8317 1712.

Vivien Hodges

Office Manager

Vivien joined STL in March 2015 and brings with her a broad range of professional experience across a number of industry sectors. She has spent the last several years as business manager of a strata law firm and prior to that she was office manager of a property investment and fund management company.

She has a wealth of experience in broad-spectrum office management competencies including cloud based technology, bookkeeping, human resource management, graphic presentation and company secretarial.

Vivien can be contacted by email at vivien@stratatitlelawyers.com.au or by telephone 02 9089 8962.

Ciro Figaro

Lawyer

Ciro joined the team in February 2015 as a Paralegal while completing his studies at the University of Sydney. Upon being admitted to the Supreme Court, Ciro now practises as an employed solicitor handling both contentious and non-contentious work, including dispute resolution as well as the drafting of by-laws, running contracts and tender processes, and working on special projects relating to the new strata legislation.

Ciro also has over 4 years experience working in the Strata industry, having worked with two of the largest strata management companies in NSW and ACT as a contracts administrator and compliance manager.

Ciro holds a Bachelor of Laws from University of Sydney and a Masters of Law from University Federico II of Naples, Italy.

Ciro can be contacted by email at ciro@stratatitlelawyers.com.au or by telephone 02 9089 8724.

 

David Kennelly

Paralegal

David holds a Bachelor of Music from the University of Melbourne, and is completing a Bachelor of Laws at Macquarie University. He moved to Sydney from Melbourne in early 2016 and joined STL as a Paralegal  where he assists with administration, drafting, research, submissions and filing. He has ambitions to build a career in the property law and intellectual property sectors.

David can be contacted by email at david@stratatitlelawyers.com.au or by telephone on 02 9091 8068.

Latest News

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The Model for Interactions Between Committees and Their OC Manager

Strata Law, Owners Corporation, Strata Lawyers, building manager

The Owners Corporation Management industry is well overdue for a shake-up. Even the very best managers that I deal with agree that the cowboy managers out there in strata-land (are there are a few of them) are spoiling the industry.

Consumer Affairs Victoria has legislation all drawn up to clean up the industry to introduce much-needed regulations and reforms. However, this legislation has been collecting dust on the bookshelf at Exhibition Street for the past 3 years. The current government has seen fit to delay the introduction of these reforms until at least 2018 when the Owners Corporation Act reforms are introduced. It remains to be seen as to whether these reforms will even be introduced prior to or after the next election, and if the current government is returned by the people of Victoria.

In the meantime, Owners Corporations will just have to continue muddling through.

I advise my clients that a building is only as good as its building manager, cleaning staff and OC Manager.

These three ‘run’ the building’s daily operations, and should leave the Committee to simply administer the building by approving quotations, periodically checking expenditure to ensure the budgets are being adhered to, and to provide further instructions to the Manager. Pretty simple stuff really, huh?

Committees that don’t have the above management model flourishing in their buildings need to look very carefully at the roles your Managers are playing, and what their expectations are. A good place to start will be the source documents and the standing delegations to the manager that would have been provided by the developer at the First Annual General Meeting (FAGM) or by a earlier Committee decision.

The OC Managers contract (which should be in the approved form) will contain the schedule of duties that the OC Manager must perform to earn the base fee. The contract will also contain the duties that Manager shall perform for an additional hourly rate.

Committees should also take care to review the Minutes of the FAGMs and any early Committee meetings where the developer controlled the Committee, as the minutes of these meetings will likely specify the standing delegations (if any) that have been provided to the OC Manager.

If those delegations stretch too far (or not far enough as the case may be) then these can be reviewed at the next AGM for the building.

The terms of appointment, and the procedure for automatic rollovers and extensions should also be well understood by the Committee. Moving from one OC Management company to another can be a very stressful and laborious process. It is best practice to start this process early and with strong communication to the current OC Manager about performance expectations.

Finally, communication is a two-way street. OC Managers have a lot of experience in acting for hundreds of buildings and they are best-placed to provide case studies and help to solve problems for Committees by suggesting solutions that have worked for other buildings. Remember, there is hardly ever a unique situation that has not been before at least a dozen other buildings before. Having said that, nothing surprises me in the strata industry these days…

Check the Rules Before Installing any Fixtures on Your Balcony or Terrace

Owners Corporation, Balcony, Strata Law, Strata Lawyer

In a recent VCAT decision, a lot owner in a Docklands building has been ordered to remove shade sails and a permanently-affixed clothesline from his terrace, in breach of the Rules of the Owners Corporation.

The shade sails were installed by the owner shortly after purchasing the lot. The owner claimed that the sails were to prevent cigarette butts, debris and glass from units above him striking the terrace and potentially causing injury and damage.

VCAT found however, that the Rules of the Owners Corporation were clear that permission was required from all relevant authorities such as the Council and from the Owners Corporation before the works to install the structures could proceed.

The Owners Corporation and VCAT were concerned with the fact that other owners in the building that looked out on the shade sails might suffer an adverse amenity effect. Furthermore, the precedent effect was taken into account in that other owners might be emboldened to install their own structures should they be allowed to remain in place.

Accordingly, VCAT ordered the removal of the Shade Sails and Clothesline forthwith.

The case raises an interesting question about a lot owners right to take proactive action to protect their lot (and seemingly themselves and their guests) from rubbish and debris falling from above. Ultimately, while there might be legitimate concerns about safety, the Rules of the Owners Corporation nevertheless prevail.

The lot owner made enquiries about his rights to install these structures prior to purchase with the Owners Corporation Manager, and was told that he would not be able to proceed with the structures without a special resolution. Ultimately the lot owner took his own view that the legislation and the Rules did not apply to his situation, and purchased in the building regardless.

Indeed all lot owners and Owners Corporations in Victoria should learn from this case, especially given the cost involved between these two parties from a three day hearing with lawyers on both sides and with multiple witnesses being called to give evidence and be subject to cross examination. 

VCAT found that the lot owners’ failure to take specialist independent legal advice prior to purchase counted against his position.

In addition, I would add that specialist building surveyor advice should also be provided, as the interface between common property and lot boundaries are difficult to determine, and indeed the principles of interpretation for finding common property boundaries are uncertain and frankly, are a dog’s breakfast. Other states and territories have clear and unambiguous statutory definitions of lot and common property boundaries. Legislators in Victoria – take note and take action.

Owners and potential purchasers need to be aware when deciding to live in ground floor or podium level apartments that there are massive risks from flying debris and rubbish from above. Unless there is a very widespread support from all owners to make changes to the common property (assuming that the architect of the building and the local Council approve of the changes) then it is unlikely that much can be done for an owner or resident in this situation.

This VCAT decision confirms that invoking a self-help remedy to mitigate the risk of damage can also land you in hot water. Remember – always check, check and check again.

A Siren Song Calling for Fair Play in the Owners Corporation Industry

Strata Law, Strata Lawyer, Owners Corporation Law, Owners Corporation

In the middle of the day a few weeks back, and in the midst of my busy professional life running a legal practice in this increasingly complex area of law, I received a phone call that stopped me in my tracks.

It was a call from a locum, ringing in on behalf of an Owners Corporation Manager that I was dealing with on a few matters for various clients. The locum explained that the Owners Corporation Manager had gone missing. No one had heard from him in a week, and the police were involved. The whole office where he worked was in shock.

In my experience, the Owners Corporation Manager was a great bloke. Professional, down to earth, committed and caring. All of the right qualities for a successful Manager.

It occurred to me, having re-read some of the more recent email correspondence between that Manager and his clients over the weeks and months leading up to his disappearance, that the workload was becoming an issue. Cracks were appearing, tempers were fraying, and you could see the unrealistic expectations being placed on both this manager and the clients.

Mental health issues in the professional industries such as law and accounting are getting a lot of attention and media coverage these days, and for good reason. But mental health issues amongst strata professionals are not well- ventilated, and this needs to change.

The strata industry is still in its infancy in Australia, and in my view is terribly unsophisticated when it comes to risk management practice. Directors of strata companies can make a small fortune in this industry, but the business model is based on loading up young and often inexperienced managers with huge portfolios of buildings, and leaving them to sink or swim.

To compound matters, owners and committee members (particularly new ones) are not clear on the roles and boundaries between what an Owners Corporation Manager can and cannot do for an Owners Corporation. This leads to unrealistic expectations that cannot be met, and an erosion of confidence in the Manager.

Typically, managers work very long hours, from the time they arrive in the morning (usually greeted by dozens of emails and phone calls) until late at night after they drive home from meetings. There is often not a lot of time left over for family and loved ones.

By its very nature, having a work / life balance while working as an Owners Corporation manager will be difficult to achieve, and the Manager knows and accepts that comes with the territory, but overall the industry does need to improve its act.

Unfortunately, the macro answer is for fees to be raised across the board – strata companies need to devote more resources (through the smarter deployment of staff and through investments in technology) to improve efficiency and output.

Owners Corporation Managers are tasked with administering hundreds of millions of dollars of property on behalf of owners, and mistakes will continue to be made unless and until strata companies modify their business model.

Proposal by Consumer Affairs for ‘use of lots’ costs to be differentially applied

Strata Reform, Strata Law, Strata Lawyer, Consumer Property Law

As part of its review into consumer property law legislation including the Owners Corporation Act, Consumer Affairs Victoria is currently considering a number of different options for reform.

One of the many options on the table that hasn’t had a great deal of publicity is a proposal to allow Owners Corporations to recover costs from a lot owner or group of lot owners arising from their particular use of a lot.

Such an approach would be a departure from the current law, which requires that lot owners contribute to the Owners Corporation in shares proportional to their lot liability.

This is known in legal circles as ‘the Mashane principle’ where those lot owners which stand to gain more from a particular expenditure, ought to contribute more.

If adopted, an Owners Corporation would be permitted to make an assessment of how much of its general repair and maintenance costs arise from a particular use of a lot, and if it were possible to assess these costs accurately, it would be permitted to issue a differential levy for the associated costs of repairs, maintenance of replacement directly to the owners of those lots.

For instance, if a particular building had commercial lots on the ground floors, and if those commercial lots used common property facilities such as toilets, stairs, services, waste bins and rubbish rooms, then it would be possible for an Owners Corporation to apportion those items that are exclusively for the benefit of the commercial lot owners, and issue a differential levy accordingly (with VCAT to enforce in the event of non-payment).

This would get around the unfair situation where a developer might set the lot liability for ground floor commercial suites at very low rates (while retaining high lot entitlement rates) so that commercial lot owners are subsidized by the residential lot owners.

The proposal from Consumer Affairs has not come out of the blue. In 2013, the Victorian Supreme Court ruled that a lot owner that did not have a balcony was not required to contribute to a special levy to replace and repair common property balconies belonging to other owners.

If adopted, the option put forward by Consumer Affairs would effectively be a codification of the Supreme Court’s decision.

Pressure groups such as Strata Community Australia and ‘We Live Here’ have endorsed the option in their response to the Options Paper from Consumer Affairs.

It remains to be seen whether Consumer Affairs will adopt and permit the expansion of this principle to allow for differential levies to be issued where the use of a particular lot affects costs such as insurance premiums, or wear and tear on common property items such as elevators or the cost of security contractors and / or CCTV.

If the Mashane principle is to be adopted by the legislature, then care should be taken to ensure the limits of the operation of the principle are clearly spelled out, and the formula for apportioning costs is carefully phrased. Any ambiguity would lead Owners Corporation and lot owners back to Court.

Developers owe fiduciary duties to Owners Corporations, but always read the fine print in your sales contract

Strata Law, Strata Lawyers, Strata Contract, Owners Corporation Law

The strata law titling system has existed in Victoria for over 50 years, and each year that passes, the system gets more and more sophisticated as clever lawyers obtain judgments from Courts regarding the interpretation of statutory and common law concepts, and from amendments to the existing laws made by Parliament.

Since 1968, the Courts of Australia have been prepared to recognise that a developer, acting as a promoter of the building, will owe the Owners Corporation a fiduciary duty to act in an Owners Corporation’s best interests, and in relation to the ways in which it sets up an Owners Corporation to be managed in the future.

Over time, the scale, extent and operation of this fiduciary duty has expanded and contracted as various Parliaments around Australia have sought to legislate in this area, and various Courts around Australia have issued rulings in cases regarding this duty.

In the Owners Corporation Act in Victoria, there is also a legislative provision which requires a developer to act honestly and in good faith and with due care and diligence in the interests of the Owners Corporation in exercising any rights under the legislation.

The common law duty extends this principle, requiring a developer not to obtain any unauthorised benefit from the relationship and not to find itself in a position of conflict (where it might be tempted to ‘self-deal’).

The operation of this duty can take many forms; for instance, it can arise in such diverse areas as ‘embedded networks’ where a developer might enter into an agreement on behalf of the Owners Corporation with a gas or electricity supplier for the bulk buy of utility services. Typically, the developer would take an annual fee as a commission for the bulk purchase of the utility. It could be said that the developer has no right to earn a commission from the energy or gas that the Owners Corporation consumes, and that any commission should be payable to the Owners Corporation itself, not the developer.

In other circumstances, a developer might enter into a service contract on behalf of the Owners Corporation with a related company (such as concierge or building management services, property management, cleaning or security). If these agreements are found to be uncompetitive with the market (either in duration of years or based on the annual fees) then these Agreements may be able to be impugned.

However, before Owners Corporations rush off to VCAT seeking declarations and injunctions, careful consideration and analysis is required of what was disclosed by the developer in the off the plan sales contracts.

This is because the fiduciary duty of a developer may be constrained or limited if there was sufficient disclosure to purchasers of what exactly the developer was going to do in the future.

In addition, if there has been ratification of any of the agreements by the Owners Corporation, then the developer might have a defence to say that the Owners Corporation has accepted the contractual arrangements and is now bound to the commercial terms.

For instance, if a Developer placed an Owners Corporation into a 25 year agreement with the developers company to provide a service, and if that agreement has been on foot for say, the last 5 to 10 years without complaint, then the conduct of the Owners Corporation has been such that it has accepted the services and may have ratified the agreement through its operation, and is now estopped from impugning the agreement.

As always, much depends on the exact facts and circumstances of each case, however it will be critically important for Owners Corporations that are less than 5 years old to take advice on these matters: because if you snooze, you’re likely to lose. 

Deadline Approaching

New Strata Law, New By-Laws, Owners Corporations NSW

Did you know that all owners corporations in New South Wales have three months from today to review their currently registered by-laws and to consider whether to adopt any additional model by-laws or special by-laws, and to repeal any by-laws which may be invalid, unconscionable or oppressive?
 

Under Schedule 3, Clause 4 of the Act an owners corporation of an existing strata scheme is to review the by-laws for the scheme not later than 12 months after commencement of section 134 (adoption of new model by-laws) (30 November 2017).
 
We recommend that most owners corporations should adopt new by-laws for:

  • Waste Disposal
  • Fire Safety
  • Smoking
  • Animals; and
  • Minor Renovations 

Email us at info@stratatitlelawyers.com.au for a quote for an all-inclusive, fixed-fee package to review, consolidate and provide new by-laws before the deadline of 30 November 2017.

Strata Title Lawyers - Pets in Apartments

Pet Ownership in Owners Corporations likely to soar after latest VCAT decision

Vertical Communities, Owners Corporations

Last week, the VCAT struck down Rules passed by an Owners Corporation that prohibited pets from being kept in residential lots or on the common property.

Despite the Owners Corporation passing a special resolution among all owners to introduce a ‘No Pets’ Rule in 2014, a tenant that moved into the complex in late 2015 brought her pet Cavoodle, and maintained that it would not be removed. The Owners Corporation issued several breach notices, but ultimately when it filed an application in VCAT to use the Rules to enforce the dog’s removal, the VCAT instead declared the Rules to be invalid, of no effect and unfairly discriminatory.

A victory for the Cavoodles of Melbourne then.

But not just for the Cavoodles – this is also a victory for the Spaniels, the Terriers, the Ridgebacks, not to mention the Moggies, the Siamese, the Persians, and we can’t leave out the Mice, the Bunny Rabbits and the Snakes either.

The decision likely means that all Rules that prohibit Pets throughout Victoria run the risk of being found invalid and of no effect. Consequently, all Owners Corporations that currently have a no-pet Rule or policy are at risk of having this struck down.

This stems from the Supreme Court decision in July from Riordan J that ruled against an Owners Corporation in regard to a rule regulating short-term letting in the building.

The judgment clarified the extent of an Owners Corporation’s Rule-making powers, which found that although Owners Corporations have wide-ranging powers and functions to make rules to control and manage the common property, however in respect of rules to manage private use of lots, these powers are in fact very limited.

As both the Supreme Court and the VCAT have now noted, even if a Rule is found to be validly made about a matter involving the common property, it can nevertheless be ruled as unfairly discriminatory and of no effect if there is no reasonable justification for the discrimination.

In this case, the Rule banning pets from the common property was found to be unfairly discriminatory based on the layout of the common property and the likely interface and meeting point for residents and dogs on the common property.

Accordingly, the decision confirms that the Victorian Parliament has not acted to confer powers on Owners Corporations that would substantially interfere with the rights and privileges usually attendant upon freehold owners. In fact, the Victorian Parliament has not conferred many powers in favour of Owners Corporations much beyond the administration of the common property, although even that power may not stand in certain circumstances.

The recent issues paper that was published as part of its review of the Owners Corporation Act 2006 by Consumer Affairs has not proposed to increase the rule-making powers of an Owners Corporation either.

Although, Consumer Affairs is investigating whether the Model Rules should be expanded to include a power to regulate pets on lots or on the common property.

Ultimately, any new legislation will not be enacted within the next 2 years however, meaning that for now, Owners Corporations may well find themselves in serious doggy doo-doo. 

Strata Title Lawyers - vertical communities

Strata law goes to the movies

Vertical Communities

I’ll stick to what I’m good at, being a lawyer that is. However, a recent movie that came to the cinemas piqued my attention, and I’m compelled to write about it. If you live in an apartment, it could be right up your alley, or ahem, garbage chute.

The 2015 film Highrise, directed by Ben Wheatley and starring Jeremy Irons, Tom Hiddleston and Sienna Miller is an atmospheric thriller that details life and society within a highrise building in London during the 1970s.

The film follows the main protagonist, Dr. Robert Laing (Hiddleston) as he moves into a new 40-storey high rise tower built by a renowned architect (Jeremy Irons) who also lives in a top-storey penthouse. The building is the epitome of chic, the upper class families live in the top floors, while the more common families live in the lower ones. The high-rise provides its tenants with a swimming pool, gym, spa, sauna, supermarket and even a school. Gradually, the building occupants feel little need to go outside the building (aside from working hours) and gradually become isolated from the outside world.

The euphoria of residing in the swish new building fades as power cuts fail routinely in the building, along with water being shut off and rubbish chutes becoming blocked, mainly on the lower floors.

Needless to say, law and order begin to disintegrate in the building due to the failing infrastructure and increasing tensions between floors. Violence increases, food from the supermarket becomes scarce, and the building devolves into class warfare between floors.

Let’s be clear – this movie (and the book written in 1975 that preceded it) is not a story about high-rise strata living. It’s a social commentary about consumerism, class divide, the scarcity of resources and the frustration of the everyday man. But interestingly enough, the high-rise building has been chosen as the vehicle to make this social commentary. And I’m interested in that commentary, and I can see, in a far less extreme and in a non-literal sense, that art might imitate life after all.

Separate entrances and plushy amenities for wealthy apartment owners are becoming more and more common in Melbourne’s towers. The two-tier trend of a separate foyer and set of amenities for the priciest penthouses, and another for the ‘rest of us’ is symbolic of an emerging ultra prestige trend in the Melbourne apartment market. Eureka tower, completed nearly 10 years ago, is an example. The Capitol Grand and Australia 108 also have split lobbies and facilities, including dining rooms, gyms and pools, for different sections of the skyscraper.

Legally, this is made possible by creating multiple limited owners corporations within the same development, so that each part of the building pays levies to its own funds, and to the unlimited owners corporation (known as Owners Corporation 1 which usually levies for expenses such as concierge, security, insurance and the like).

But to coin a new phrase, those who pay together, stay together. Or more accurately, those who sweat together stay together.

I’m not sure that today’s fast-paced society is in need of such extreme segregation. Certainly not in the strata world. That’s not to say that a market doesn’t exist for these facilities, because clearly there is one. And of course,  business class and first class on airplane flights has been around for 30 years, together with separate queues, check in and lounge facilities.

Let’s all hope that the ultimate unraveling of the building and its occupants in Highrise does not come to pass, metaphorically in society or literally in the case of an actual building, but it is worth heeding the movie’s message in parodying the evolving exclusionary, segregated and separate direction that society is taking. Perhaps developers, town planners and councils ought to consult more with sociologists and psychologists about what type of common facilities are going to work best for vertical high rise communities. Separates aren’t always better. 

Strata Title Lawyers - storm damage to common property

Wet n’ Wild comes to Strata-land

Owners Corporations, Common Property Repairs

Unfortunately, we are well into storm season in Australia, and the east coast is being battered with its usual fair share of heavy rains and high winds.

Dealing with the aftermath of a storm is difficult for everyone affected. It is particularly difficult for Owners Corporations because they must also deal with upset lot owners, dispossessed tenants, and damage caused to common property. But where exactly does an Owners Corporation’s obligations start and end?

The most important thing that an Owners Corporation should have in place is the right coverage under their insurance policy. It is a statutory requirement to be insured for the full replacement value of all common property assets (unless you are in a two-lot scheme). In addition, you should ensure that your insurance policy covers damage such as storm damage, to the greatest practicable extent, and covers the cost of emergency or crisis accommodation for displaced residents, to the greatest possible extent.

In the aftermath of a storm, an Owners Corporation needs to be proactive to ascertain the extent of any and all damage to the common property. Ideally, its manager or a consultant should come on-site as soon as possible to assess damage, and if a resident reports any damage, the Owners Corporation should act promptly to investigate and make repairs.

This assumes of course, that the damage is done to common property, not lot property. In Victoria, the boundaries within a lot that delineate the point between common property and lot property can vary widely. Much depends on the notations recorded on the header sheet of the registered plan of subdivision as there are no hard and fast principles of interpretation. Often the notations read like gibberish to the ordinary person and state matters such as “location of boundaries defined by buildings – interior face – all boundaries.” What this seemingly innocuous phrase means is that items such as tiles and waterproof membranes, and the underside of ceilings will belong to the lot owner, not the Owners Corporation.

This matters a great deal when there is storm damage to these types of items, as it might well mean that lot owners might be required to claim any damage from a storm to these items under their own home and contents policy. If their insurer does not provide this type of coverage, then the owner can be left high and dry.

In recognition of this situation, some Owners Corporations elect to ensure that their policy of insurance for damage covers all parts of the building (including lot property) but may have a Rule in place to require owners to pay for the excess under any claims made to the insurer. Committee members ought to discuss these types of situations each year when the policy is up for renewal.

The legislation states that Owners Corporation have a strict duty to repair and maintain the common property in good condition. Where an Owners Corporation fails to meet these obligations, they may be liable for any property damage caused as a result, as well as pure economic loss if that loss is reasonably foreseeable.

In other words, when a storm damages common property and that damage causes consequential damage or loss to a lot, the Owners Corporation may be responsible. If a Body Corporate does not act promptly, it places itself at risk of being sued. That is why being proactive and acting promptly is so important.

Strata law owners corporation committees

Owners Corporation committees are like a box of chocolates – you never know what you’re going to get

Owners Corporations, Investments, Vertical Communities

In the major newspapers, there seems to be a negative news story almost every day about the oversupply of apartments in Melbourne, or reasons why the capital values and rents for apartments will continue to fall, or the myriad of reasons why the banks won’t issue mortgages for apartments in certain suburbs.

While I’m sure all of these articles and reports are most likely spot on, I’d like to point out that for a growing number of persons, the decision to purchase an apartment is not simply an investment or a speculation. For a growing slice of the market, people are buying themselves a home. A home for them to live in, and a home to raise a family in, or a home to escape family if downsizing, retiring or moving in from the suburbs.

Owner-occupier rates through the Melbourne area are growing. While investors and ‘rent-vesters’ still comprise the majority of purchasers in the apartment market, anecdotally I am seeing a large increase in the number of owners that simply wish to live and reside in their apartment, and enjoy the convenience and functionality of a life ‘in the city.’

And this growing population of owners expect and demand certain things and have high expectations – things such as a spotlessly clean and striking lobby and common property area, an engaging and deeply positive and personal relationship with their building manager and concierge, higher quality security and security systems, regular communications with their Committee, and frequent upgrades to the common property. And they’re willing to pay for it too. But this is going to lead to a divergence with the investors and rentvesters (especially in a declining market). The annual budgets and the quarterly fees are only going to trend upwards, while the capital values and rental yields may trend downwards slightly or remain static. There are rough seas ahead for many Owners Corporations to pilot in the next two to three years.

In my view, the optimum way to traverse the storms will be to appoint wise and experienced managers with good budgeting and financial acumen, ensure that Committees are stable and to seek out Committee members with a range of skills; the best Committees have a mix of young and old, private sector and public sector working experience, men and women alike.

Committees will need to balance the needs of the investors to keep the annual fees and levies static, while meeting the needs of the owner-occupiers who desire personalized service and rigorous maintenance and upgrade of common property areas.

The buildings that are better at doing this will enhance their reputations and preserve and increase the value of their apartments, while the others will dwindle and fall behind. The gauntlet has been laid down. Sink or swim.

Strata law owners corporation rules

Rules, rules and more rules

Owners Corporations, Common Property Repairs, Vertical Communities

An owner installs an Air Conditioner unit on the common property roof. A tenant stores their bicycle and some boxes of rags and domestic cleaning equipment in their car parking space. A tenant installs a BBQ and some garden furniture on the common property courtyard to create an enclosed space. An owner decides to place some potted plants near the entrance to the complex.

For each of these situations detailed above, an Owners Corporation has to consider the issue from the point of view of managing and regulating the use of and access to the common property. The legislation requires the Owners Corporation to control the common property and to ensure that common property is not misused.

Some owners corporations might turn a blind eye to these situations, citing a desire to either avoid drama or conflict, or maybe even due to apathy or tacit and silent approval.

But consider for a moment the implications of that air conditioner unit failing due to lack of maintenance over a period of years, catching fire one warm evening and engulfing the common property roof in flames. Assuming everyone in the complex escaped unharmed, would an insurer void coverage under its policy of insurance on the grounds the air conditioner unit was an unapproved installation? The owner that installed the air conditioner unit might be required under the common law to compensate the Owners Corporation. But if the damage to the roof is extensive, and if the owner concerned is not particularly wealthy, then the liability to cop the cost of the repairs falls back to the members of the Owners Corporation.

Ditto the situation in the car parking space. If a car catches fire in the basement, would the presence of the rags and toxic cleaning equipment exacerbate and accelerate the spread of fire? How would liability be apportioned in this case?

What about the tenant who took over common property to create their own private outdoor space? Does the Owners Corporation have the power to remove the furniture if the tenant ignores requests to remove it? If they did, where would they store it? What if the furniture got damaged during the time it was in storage?

All of these situations have occurred in Australia, and each time, the particular  Owners Corporation has found they didn’t have the powers under their existing Rules to properly cater for the situation. The majority of Owners Corporations consider that the Rules put in place for their Scheme (either the Model Rules under the legislation, or the original Rules put in place by the developer) are the start and end point for compliance. However, the Model Rules and the ‘developer’ Rules are usually very basic, generic and are not tailored to the individual characteristics of the different types and layouts of buildings that we live in.

I recommend that every three years, the Committee should review the Rules, and consider whether new situations have arisen that necessitate the passing of new Additional Rules.

The current legislation empowers Owners Corporations to make the types of Rules it wants, subject to the legal doctrines of ultra vires, unreasonableness, inconsistency and of course, discrimination.

As always, a special resolution would be required to change or introduce new Rules. However the cost of not taking these steps would far outweigh the costs of convening a ballot or special general meeting. In my view, Owners Corporations should take a proactive view towards regulation of their communities. After all, and to quote one of the other columnists – we live here. 

Strata Law vertical community security

The impacts of crime in high-rise buildings, and how Owners Corporations can plan to improve vertical community safety

Owners Corporations, Vertical Communities, Security, Common Property Repairs, Short-term Lets

As we all can tell just from looking at our windows, high-rise buildings now make up the predominant form of new housing in the Melbourne inner-suburb areas. Local and state governments have implemented changes to planning legislation to permit high-density housing in an effort to combat the pressures of maintaining and repairing a sprawling infrastructure asset base. The changing housing and social environment will mean that more and more Australians will be calling an apartment their home in the coming years. However, little consideration has been given as to how the government’s changes to its policies might impact on levels of crime and perceptions of safety and the fear or crime within these vertical communities.

However, research academics are finding considerable empirical evidence to suggest that the interconnections between transport networks, land use, and population density can contribute a great deal to explain the crime rates at certain places and at certain times.

Dr. Sacha Reid (Griffith University) and others recently published a Report to the Criminology Research Advisory Council called “Crime in High-Rise Buildings: Planning for vertical community safety.”

From a large sample of high-rise buildings in Queensland, the Report rather unsurprisingly found that buildings with predominantly long-term residential tenure recorded the lowest levels of crime. Buildings with short-term tenancies only (such as hotels and serviced apartments) recorded the next –highest rates of crime, while the runaway leader were buildings with mixed tenure (being buildings that had a combination of both short and long-term tenures) which reported the highest amount of crime.

Surprisingly, whether or not a building had a sophisticated security system, roving security patrols or had an on-site building manager mattered little in the reported crime rates at a building.

The report makes for powerful reading for committee members, building managers, security contractors and owners corporation managers. There is great potential that some high-rise buildings in and around our local communities might be labeled as ‘risky facilities’ in the future, which could lead to a diminution in value of all of the apartments within those buildings.

Often, the design of the building can lend itself to being targeted by criminals, or can otherwise raise the fear of crime amongst residents. Crime Prevention through Environmental Design (CPTED) is often not taken seriously by developers and builder (nor the Councils – in approving the buildings). However, Owners Corporations should take charge of the security of their communities and should consider engaging an expert to advise them on security measures to shore up entry points and to ensure that ground floor units are not easy to access.

The presence of an on-site Manager can also act as a great crime deterrent in and of itself. A Manager that works 9am – 5pm Monday – Friday would be unable to react to matters quickly, and this can greatly enhance resident’s perception of safety and guardianship.

Security patrols are another key component of regulating vertical community safety. Anecdotally however, I have seen many Owners Corporations that have terminated the security patrols from the annual budget in an effort to save rising costs. The one point that I would note is that Owners Corporations should consider approaching their neighbours to share the costs of security patrol during nighttime, weekends and at special events, thus each paying a smaller cost to receive the service.

Much more research needs to be done in this very important area, and I would encourage local and state governments to impose greater restrictions on developers and builders at town planning stage to ensure that CPTED is strictly planned for and enforced. 

Strata Title Lawyers - high speed internet in apartments

High-speed internet thrills are just a special resolution away…

Investments, Owners Corporations, Common Property Repairs

Technology is advancing so quickly these days. That television set and that stereo that we bought just three years ago (which still works just fine by the way) is all too quickly consigned to the obsolete pile, as consumer electronic brands compete to bring out the next biggest thing. In fact, we don’t just need an iPhone to keep in touch, nowadays we need an iWatch for when we walk out the front door and forget our iPhones.

In order to keep us connected to the world around us, the networks and cabling and telecommunication towers that line our cities and streets are becoming more numerous, as our desire and demand grows for faster and faster download speeds to power our handsets.

The problem for telecommunications network and service providers is where to place all of this cabling and infrastructure without it becoming an obtrusive eyesore for the public, and there is only so much cabling that can be buried under the footpaths and streets of this city. The answer is to utilize the MDF rooms and the rooftops of many of our high-rise apartment buildings.

In addition, fitting out the common property corridors and hallways with receivers and access points can boost residents’ access to high-speed cable and wireless internet and if its one thing that every apartment resident loves, its lighting-quick internet speeds. In some buildings, this can become a selling-point to increase the weekly rental value of units.

The challenge for Committees is to let the right service provider in. There are dozens of telecommunication companies that offer services in this area, and the Owners Corporation could decide to enter into an access agreement that is mutually beneficial for both parties and at no cost to the Owners Corporation.

As always, there are things to look out for, such as:

  • Will the service provider promote open access to competing service providers in the building, so that residents are free to choose their own provider?
  • Is the service provider installing the latest technology into the building, or are they simply installing left-over stock of old technology that will become obsolete in 12 months time?
  • Is the service provider requiring rooftop access to install equipment and if so, do you know what is being installed and for what purpose? Rooftop installations can be quite lucrative for network providers, as the bandwidth and frequency can then be utilized to add to the existing network and therefore generate income from third party service providers that need to connect and host from these networks. Owners Corporations should always look to maximize the opportunities to defray levy costs, and earning income from leasing rooftop space that is seldom used to network providers in a handy way to keep levies low. But roofspace should never be given away for nothing.

Some of the lower-end service providers are now aggressively seeking to expand their business share by serving buildings with Installation Notices under the Telecommunications Act and are then forcing their way into buildings around Melbourne. These Installation Notices should in most cases be objected to strongly by the Owners Corporation, and within 7 days, otherwise the Owners Corporation risks the prospect of accepting these service providers to enter the building.

However, any installations or additions to common property by these service providers shall require the Owners Corporation to first pass a special resolution, and especially if rooftop antennas are proposed to be installed.

In summary, these types of service upgrades and the adoption of this technology ought to be welcomed by Committees, but the devil is always in the fine print and care should be taken to ensure that the building is not getting fleeced. 

Strata Title Lawyers - increasing attendance at Owners Corporations' meetings

Tips for increasing numbers of attendees at meetings of Owners Corporations

Owners Corporations, Strata Management Industry, Meeting Procedure

The majority of large residential buildings (100 lots or more) historically struggle to obtain a quorum at both the Annual General Meetings and Special General Meetings throughout the year.

A quorum is achieved if more than 50% of the total votes (or lot entitlement) is present at the meeting either personally or by proxy. If a quorum is not achieved then the Meeting cannot officially make decisions on the matters listed on the Agenda.

In most instances, the Chairperson will decide to proceed with the Meeting despite the lack of quorum, and seek to pass the motions listed on the Agenda on an interim basis. This means the decisions cannot be acted on for at least 29 days after the meeting, and only if the Owners Corporation are not petitioned by 25% of owners to overturn the ‘interim’ decisions.

However, 29 days is a long time to wait before acting on any decisions of the Owners Corporation, particularly if urgent repairs are needed, or if levy notices are due to be mailed out, or if legal appeals are required to be brought within a certain timeframe.

In order to boost the numbers present for Meetings, here are my tips and tricks for getting more bums on seats:

  • Announce the meeting date, time and location in as many forums as possible (mail circulars, emails, text messages) and hang posters and flyers in all lobbies and elevators;
  • Strongly encourage owners to give proxies to Committee members or friends if the owners cannot attend;
  • Give thought to scheduling the meeting for a time in which most people are likely to attend (a building in Docklands recently held their AGM at midday on a Wednesday. It was no wonder that hardly anyone showed up);
  • Publish an end time for the Meeting, and stick to it. Many owners cite their reason for non-attendance as being that “they don’t want to be stuck at the meeting for hours on end”;
  • Leave general business items for after the Meeting ends, meaning that those owners that have to leave can leave, without fear or embarrassment;
  • Plan and publicise a social event before or after the meeting and include food and drinks;
  • Give away door prizes or a raffle (vendors of the Owners Corporation may be willing to donate door prizes);
  • Arrange for guest speakers such as local MPs, lawyers, and architects to address the building on local issues; and
  • Acknowledge and thank all of the volunteer work that committee members have contributed throughout the year, and give written certificates or a written thank you from the Chairperson. 
Strata Title Lawyers - Buying an apartment off the plan

Buying an apartment off the plan

Common Property Repairs, Investments, Real Estate

There are still a large number of multi-storey high-rise developments being marketed and sold ‘off the plan’ in the Melbourne Metropolitan area.

As compared with buying an existing property, there are many potential benefits such as good pricing offered by developers needing to satisfy finance requirements, a potential capital gain during the period between signing the contract and settlement, the flexibility and choice regarding layout and floor plan size, and more time to arrange your financial affairs before moving.

However, it is well-reported that a large number of these newer developments are being financed and project-managed by cashed-up Chinese and Malaysian property syndicates (with Australian developers acting as the fronts) and with less and less reliance on the major Australian banks.

As a result, the developers are benefitting from the less-restrictive requirements imposed by the lending conditions of the traditional financiers and this can, in and of itself lead to more risks for the eventual owners of these apartments.

Some of the most important things for intending buyers to consider are (1) the profile and track record of the builder and developer. For instance, do they have a history of doing good work in Australia and around the world? Do they stand behind their developments? Do they return to their developments to fix any defects? Are they financially solvent? These matters can be checked via online enquiries. If the developer runs into trouble during the intervening period between the sales contract being entered into and settlement, then there is the risk of the deposit being lost, or the project being cancelled or at least substantially delayed.

(2) Has the developer provided sufficient information to understand what is being purchased? For instance, are the architectural plans of the building and common areas no more than generic images? Have the internal furnishings been specified?

(3) Have the running costs of the building been properly specified? Some Owners Corporations have had nasty surprises after settlement when it has been discovered that the budget and levies had been overwhelmingly under-estimated.

(4) Will the building be completed in stages and which stage will the unit be completed within? There can be instances of disruption and loss of amenity for owners that settle early, as they have to move in while the upper levels of the towers are still being built, with workmen and construction noise continuing for several months after settlement.

(5) Will the building be independently managed by reputable Owners Corporation Management companies and Caretaking companies or does the sales contract provide the developer with the discretion to appoint whomever they like and ‘lock the Owners Corporation’ into contracts of varying lengths?

(6) Do the proposed Rules suit your needs in terms of your personal attitude towards subject matters such as pets, smoking, the ability to short-term let, and the ability to carry out your own renovations?

(7) Do you know whether the apartment will have an obstructed or unobstructed view when completed?

There are always risks implicit with any investment, but with a large choice of apartments currently on the market, potential purchasers can afford to shop around and be ‘picky’ about whom they choose to invest their money with. Reputable developers with a good track record will do well out of the Melbourne market, while those developers who do not have a good reputation or are new to the market may struggle to get their developments sold quickly, unless they market the building overseas and sell to overseas owners. 

Apartment care share arrangements

Car-Share arrangements within existing buildings can prove to be a real winner

By-laws, Governance, Rules

With the sheer scale of new high-rise developments that have gone up in recent years in inner-Melbourne, the challenge for these buildings is to maintain and maximise the value of the units and the common property by providing unique services and facilities to residents that have a tangible, beneficial and practical impact on the residents’ daily lives.

A number of new developments offer interesting communal facilities such as movie theatres, function rooms, wine cellars and the like.

One area where existing buildings can seek to differentiate themselves from the rest is through the provision of on-site share-car services or ‘pods’.

The trend towards high-density living means car ownership is increasingly a burden. With the ease of public transport trams and the increased network of bike lanes springing up all over the city, a high-number of inner-city dwellers will now only use their vehicles on the weekends to get the weekly groceries or for the odd trip out of town.

Providing a car-share pod within a residential building provides the residents (and nearby businesses) with the convenience of accessing a car when they need one, without any of the maintenance costs. The cars can be booked on an hourly basis for as little as $10 / hour including fuel and any tolls. Some car-share operators even offer free membership for tenants residing in the buildings.

Statistics from the City of Melbourne and Go Get reveal that for every share car  introduced, a total of 12 private cars are removed from Melbourne’s roads. Throw in the reduced greenhouse gas emissions, and there’s a scalable community benefit for all residents.

Some local Councils are even prepared to award Green Star Points towards ‘Green Building’ Accreditation for buildings that install car-share pods.

The trend towards electric and hybrid cars such as the Tesla means that in the future, Owners Corporations may need to contemplate the installation of ‘re-charging stations’ on common property to allow electric cars to recharge their batteries. As always, the early adopters of innovation and technology will stand to benefit the most.

However, before an Owners Corporation races off and enters into any agreements with a car-share provider, a Special Resolution may need to be passed if there is to be any alteration to use of common property, such as the deletion of any visitor parking spaces, or through the utilisation of a previously non-specified area of common property. Care will also need to be taken to read the fine print if there is proposed to be any lease or license agreement entered into with a car share provider, as this would trigger the need to pass a Special Resolution also. 

Conducting business in a residential unit in a high-rise building

By-laws, Governance, Rules

Employers and organisations all over Australia are beginning to offer its employees flexible working solutions to enhance productivity and sustain employee engagement, by allowing employees to work from home via a home office.

At the same time, due to online innovations and a rapidly changing marketplace on-line, more and more tech-savvy Entrepreneurs are starting businesses using no more than a mobile phone and a laptop and working out of their bedrooms.

Owners Corporations need to be aware that owners and residents will frequently engage in acts of commerce from their residential units, and otherwise may conduct a fulltime business activity from their homes.

From a legal perspective, the starting point is that any resident or owner that wishes to run a standalone business from their residential unit should check with the local Council to see if the Planning Permit for the building and the zoning allows for a commercial activity to be conducted as a permitted activity.

Consideration also needs to be given to the issue of insurance – a public liability policy ought to be taken out in the name of the company, trading name or entity – to cover any damage caused to the building or to other owners or residents that occurs during the acts of business (for example – fire, flood and electrical shocks).

Most importantly, owners or residents need to carefully review the Rules of the Owners Corporation to check whether the Owners Corporation has any specific requirements or criteria to satisfy before commencing the business activity.

Most Owners Corporations will already have a registered Rule that permits a Home Office activity to be carried on, so long as there is only one fulltime employee working out of the lot. Some types of businesses (such as beauty salons, remedial massage clinics hairdressers and Childcare centres) will have specific and additional Council-imposed criteria to satisfy before they can operate.

As the world continues to change around us, Owners Corporations need to be aware and respect that Rules need to be flexible, and sometimes need to change if they are out of date. For instance, a Rule that prohibits a non-residential use of a lot is open to challenge at VCAT and could be struck down for being unreasonable.

A regular review and audit of the registered Rules of the Owners Corporation should be completed every 5 years to take account of changes in the legislation and the common law decisions that come out of the Tribunals and Courts around Australia.

Owners Corporations a powerful force - Strata Title Lawyers

Owners Corporations are a powerful democratic force - if only they knew

By-laws, law reform, Rules

I’ve said this before, and I’ll say it again – it is well worthwhile and overdue for an in-depth analysis of Owners Corporations from policy analysts in the government sector on the affordability, sustainability, amenity, privacy and livability of persons living in and communities living together in high-rise towers.

We have all seen the cranes around town , and the real estate advertisements in the papers – Melbourne has a glut of residential apartment buildings, with many more are on the way.

For too long, the government policy in this area went too far in favour of developers, leading to the creation of those shoebox 30 m2 apartments with little or no natural light, and in some extreme circumstances, developers would assign long-term management rights agreements to themselves, their friends or subsidiary companies they control and for uncommercial terms and remuneration

We saw in the latest round of state elections late last year, that the City of Melbourne seat became a closely-run contest between Labour and the Greens. In the leadup to that election, both candidates pledged sweeping reforms in key areas of concern for Owners Corporations.

However, as is often the case, once governments are formed and agendas are set, things move fairly slowly after that. It is time for Owners Corporations throughout Melbourne to form a cohesive, committed and effective lobbying group, and to open the lines of communication with the political sphere.

Take for example – the short-term letting issue in Victoria. There has been much media attention about an owner’s right to let or license their apartment for short-term stays.  However, any reform in this area will take years – and despite the recommendations that will come out of the working party formed for this inquiry.

In 2014, Air Bnb, the giant accommodation service provider, raised $800million US in venture capital, the majority of which has been pledged to be spent on securing and shoring up their business model. Air BnB will spend hundreds of millions this year on lobbyists, Public Relations Firms, and on teams of lawyers whose sole aim will be to ensure that Air BnB is neither legislated against or otherwise outlawed. In addition, the business giant will bombard the public with soft advertising campaigns, sponsorship deals, fundraising initiatives and other types of marketing in the UK, Europe, South America and Australia.

Any owner or resident living in a tower that struggles with the effects of short-term letting will shortly not have an effective and audible voice in this campaign, and will not be able to raise their voice above the cacophony of the lobbyists and slick PR Machines that Air BnB and others employ to scream at the policymakers and politicians.

The question is – can the Owners Corporations of Victoria band together as a unified voice on this topic and others, and in time to make a difference?

As a single block of voters comprising may thousand residents, the Owners Corporation ‘vote’ can and would make a difference to the outcome of any election in this State.

It is a pity there is not another election anytime soon.

Building defects and duty of care - Strata Title Lawyers

Building defects and duty of care

Building Defects, Case Law, law reform

BROOKFIELD MULTIPLEX LIMITED v OWNERS CORPORATION STRATA PLAN 61288

HIGH COURT DECISION – OCTOBER 2014

The High Court has unanimously allowed an appeal brought by Brookfield Multiplex Ltd (the Builder) and overturned a decision of the NSW Court of Appeal by ruling that the Builder does not owe The Owners – Strata Plan 61288 (the Owners Corporation) a duty of care.

This decision has an impact on all building defect cases Australia – wide, and is not limited to the NSW context.

Background

The case concerned a strata-titled apartment complex that was built pursuant to a contract between the Builder and the developer, Chelsea Apartments Ltd (the Developer).

The apartments were then subsequently sold to various owners pursuant to standard form contracts of sale.

All the apartments were then leased to a hotel operator, Park Hotel Management Pty Ltd (the Hotel Operator). The Hotel Operator used the apartments for a serviced apartment hotel and effectively controlled the Owners Corporation as the leases required the owners to provide a proxy to the Hotel Operator.

Thereafter, latent defects were discovered in the common property some years after occupation had commenced.

The Owners Corporation filed proceedings against the Builder for causing pure economic loss.

The principal question to be answered by the High Court was whether the Builder owed the Owners Corporation and/or the Developer a duty to exercise reasonable care in the construction of the building to avoid the Owners Corporation from suffering pure economic loss resulting from the defects in the common property. If the High Court found that the duty existed and that duty was breached, the Builder would have been held liable for negligence.

The Chief Justice of the High Court, French CJ, held that the nature and content of the contractual arrangements (which included detailed provisions for dealing with and limiting defects liability), the sophistication of the parties and the relationship of the Developer to the Owners Corporation all militate against the existence of the asserted duty of care to either the Owners Corporation or the Developer.

Accordingly, it was unanimously held that the Builder did not owe a duty of care to the Owners Corporation or the Developer.

Will this case apply to residential buildings and Owners Corporations?

The decision suggests that a builder would not owe a duty of care to an owners corporation of a residential strata scheme if vulnerability cannot be established.

The Court referred to the Home Building Act (NSW) as an example of the implementation of statutory provisions to supplement the common law of contract for providing for special protection to identified classes of purchasers because they may not be expected to be sufficiently astute to protect their own economic interests.

The Court noted that State Governments that draft legislation can make a policy choice to differentiate between consumers and investors in favour of the former and if legal protection is now to be extended, it is best done by legislative extension of statutory forms of protection.

In coming to this decision, the High Court made references to the general rule of the common law that damages for economic loss which are not consequential upon damage to persons or property are not recoverable in negligence even if the loss is foreseeable.

The High Court focused on the vulnerability of the parties to ascertain if the Owners Corporation could fall within the parameters of an exception to this rule.

As the Developer was the original owner of the apartments and was not vulnerable, the Owners Corporation could also not be vulnerable.

In addition, as the Owners Corporation had not come into existence until after the defective work was carried out, it could not establish that it relied upon the Builder. Accordingly, the Owners Corporation could not establish that it was independently owed a duty of care.

Owners Corporations Insurance - Strata Title Lawyers

'Extra' Policies of insurance for Owners Corporations buy peace of mind for owners

By-laws, Governance, Rules

At every Annual General Meeting, there will be a standard motion on the Agenda to renew the policy of insurance for the Owners Corporation.

An Owners Corporation is required by the legislation to hold a minimum of $10 million coverage for acts that involve public liability, as well as replacement and reinstatement insurance for the value of all buildings and structures on the common property.

However, there are many other types of insurance that can be taken out by Owners Corporations, and owners should carefully review the policies and decide whether any of these extra types of insurance ought to be added to the Policy.

Factors such as the age of the building and whether there are any legal disputes on the horizon ought to influence the type of insurance coverage that an Owners Corporation should elect to add to its policy. Although I should note that Owners Corporations are required to comply with the utmost duty of good faith in disclosing any actual and potential issues to an insurer prior to entering into any policy.

In addition, owners ought to instruct their Managers to obtain at least two quotes from different insurance providers, or otherwise use a broker. There are rumours that a large foreign-owned insurer will enter the market soon, offering competitive rates which may lead to lower insurance premiums in the coming twelve months or so. Watch this space.

By ordinary resolution at an AGM, the Owners Corporation can deicide to take out additional policies to cover things such as:

  • Office bearers’ (Committee) legal liability;
  • Workers Compensation;
  • Fidelity Guarantee;
  • Machinery Breakdown;
  • Catastrophes;
  • Legal defence expenses;
  • Government audit costs;
  • Appeal expenses; and
  • Common property contents (for items such as art, floor coverings and furniture in the lobby areas).

Recent events such as the fire in the Lacrosse building in Docklands should serve as a sobering reminder to all that  the operation of these types of policies ought to be of paramount to the Owners Corporation.

Having good legal advice to translate the general and specific exclusions of each policy will also assist Owners to understand exactly what level of coverage might be expected.

A comprehensive policy will provide ease of mind for both residents and owners alike. If owners are unsure about what policies will be right for them, a number of Managers and brokers can organize a meeting and personal briefing with Committees to discuss their options.

Owners Corporations and building defects - Strata Title Lawyers

Owners Corporations need to observe time limitation periods for bringing a building defect claim

Building Defects, Common Property Repairs, Governance

Owners Corporations owe a strict duty to repair and maintain its common property, and this duty can be enforced by any member of the relevant Owners Corporation.

The duty to do so arises whether or not the damage to the common property is brought about from fair wear and tear, defect, storm event or from any other cause.

If an Owners Corporation suspects that there is damage to common property (or accelerated deterioration) from either:

  • defective workmanship or building practice; or
  • defective design by the builder / developer/  architect

then the Owners Corporation should immediately engage an expert Engineer to inspect the common property and commission an expert report on the exact cause of the defect and an explanation as to how it should be fixed.

It is well known that an Owners Corporation has only 10 years from the date of the occupancy certificate to bring a claim for defects of the common property. What is not as well known is that the time limitation period is reduced to 6 years in circumstances where the Owners Corporation becomes aware of the existence of the defect (or is ‘reasonably’ taken to be on notice of the existence of the defect). If the Owners Corporation has missed the time period in which to file a claim, then it will have no choice but to fund any repairs themselves by raising special levies.

It is not compulsory for a Builder to have insurance to cover his workmanship faults if the building was constructed after 2003 and if the building is in excess of three storeys.

Care should also be taken to find out whether the Builder’s company is still in business. If it has been de-registered, then there will be no utility in bringing a claim.  An Owners Corporation should also investigate whether the builder sub-contracted to an alternative company to complete a particular part of the building, as this will have a bearing on who the Owners Corporation can chase for rectification.

Earlier this year, the Supreme Court further confirmed a long-held view that an Owners Corporation may sue a developer for defects under the Domestic Building Contracts Act, although only in circumstances where the particular contract between the developer and builder makes explicit reference to the nature of the building work to be performed.

This is a complex area of the law, and great care should be taken in engaging any expert or in taking any steps to bring a claim. However, it is recommended that an Owners Corporation ought to be commissioning building-wide reports from around the 5-year mark after completion with a view to bringing a claim for any defects against all relevant wrongdoers. It is very rare that a Builder’s company would still be registered ten years after the project is completed, limiting the window of opportunity for an Owners Corporation to seek redress.

Owners Corporation strata records

How to obtain records from your Owners Corporation

By-laws, Governance, law reform, Rules

In any given month, I will be contacted by several lot owners requesting assistance in ‘getting answers’ from a Committee or Owners Corporation about certain decisions made.

The most common question that owners want to ask are the “why” questions. Why did the Committee make this decision? Why did it not seek alternative quotes? Why were other owners not consulted?

Inevitably, the advice that I give to these owners is always the same: by all means, ask the questions, but don’t expect any answers. There is nothing in the Owners Corporation Act to compel the Manager, the Chairperson, the Secretary or the Committee to answer the ‘why’ questions?

However, what the Owners Corporation must do when requested, is supply certain documents and records for the inspection of owners, and within a reasonable time.

Again, the legislation makes it clear that the Owners Corporation does not have to send the documents to owners. An owner or their agent must make an appointment and physically attend the Manager’s office. There, they will be entitled to review the documents and records of the Owners Corporation and if they pay a fee for photocopying, they can take copies of the records for their own purposes.

There are certain practical considerations to take into account here. Firstly, many Owners Corporation Managers will only keep certain records on-site, with the remainder stored in archives and in storage. Therefore, a request to review “all financial records of the Owners Corporation over the last three years” may not be able to be accommodated without at least 7-14 days prior notice. To avoid disappointment at the appointment, owners should always specify the class and category of documents, with the date range when making the appointment. This will give the OC Manager sufficient time to retrieve the records for the owner.

On this topic, I’m always asked to determine what is a reasonable time period for inspection of the documents, as the OC Act states that an Owners Corporation must make records available within a reasonable time. The answer is that it depends on the nature of the request and the type of documents requested. For instance, if an owner only wishes to see the accounts for the last six months, then that information should be at the fingertips of the OC Manager, and it would be reasonable to provide access at reasonably short notice, perhaps a few days. However, if an owner is requesting a range of documents dating back two or three years, then as mentioned earlier – it could take 14 days to retrieve the archive boxes., with a further two days for sorting through the documents to find what is requested.

Another point to be raised is the issue of whether an Owners Corporation can provide private information, such as the telephone numbers and email addresses of owners and residents. The answer is that an Owners Corporation must provide the roll or register of owners upon request. The roll is to contain the “names and addresses” of owners. A number of computer programs will also include telephone numbers and email addresses in the same document, however Owners Corporations need to be aware that this information must be redacted before the roll is handed over. Otherwise, there may be a breach of privacy under the Privacy Act, and an owner that suffers a breach of privacy may seek to hold the Owners Corporation responsible for handing over their private information.

Next issue, we’ll discuss the concept of privilege and the release of those privileged and ‘sent in commercial confidence’ documents.

Terminating a strata contractor or manager

Terminating a contractor or manager

By-laws, Governance, Rules

One of the more common legal issues that I am asked to advise on by Owners Corporations is in regard to the removal and replacement of contractors and agents that assist an Owners Corporation, from building managers and caretakers to owners corporation managers and security companies.

Typically, an Owners Corporation may perceive, over a period of time, that a person or company engaged by the Owners Corporation  is not fulfilling their duties under the contract, and will seek to terminate the relationship.

Breaches of duties under contract are notoriously difficult to prove, and often lie in the eyes of the beholder. If the Committee of an Owners Corporation perceive that breaches are occurring, they ought to take scrupulous notes and create an electronic footprint of the breach, noting the exact dates and times and a summary of what occurred.  Legal advice should be sought earlier rather than later, as most commercial agreements will require not only a breach notice to be served giving notice of the exact breach, but also specify that a minimum period of time (usually 21 days) be given for the contracting party to remedy the breach.

The easier method of terminating an agreement is to wait until the expiry of the term of appointment of that contractor or company. Again, care should be taken in ascertaining exactly what dates the term of appointment rolls over. Many commercial agreements are for 24 months, with successive 24 month terms rolling over, should the key dates pass by without notice of termination being given.

In addition, an Owners Corporation may be able to terminate an agreement in the event the contract was not executed in the approved form, or was not signed by the Owners Corporation.

Usually, the Committee of the Owners Corporation has the legal authority to terminate or dismiss a contractor or company. However, an Owners Corporation manager for instance, must be removed and appointed at a general meeting of the Owners Corporation via an ordinary resolution.

The termination of a company or contractor need not be a nasty or protracted affair; to avoid unnecessary litigation and costs, the Owners Corporation ought to take the time to inform the key personnel at an early point – and preferably face to face -  exactly why the Owners Corporation no longer require their services. Often, in return for a reference from the Owners Corporation, a contractor or company will forego any outstanding service fees they are owed.

While an Owners Corporation ought not to put up with a sub-standard service, an Owners Corporation Committee should always be aware that they are held to a duty to act in the best interests of the Owners Corporation at all times. Consequently, care should be taken in making these decisions, otherwise it can lead to needless litigation.

Stoking the embers of a smoking debate

By-laws, Rules

Smoking cigarettes in common property areas and on the balconies of units is a hotly-contested issue that divides any residential building.

The overwhelming medical evidence today concludes that not only is smoking severely injurious to personal health, but also ‘smoke drift’ or passive smoking can sometimes be just as injurious to health as it is to the person inhaling the cigarette themselves.

Residents shouldn’t have to put up with smoke drift and cigarette butts coming from other balconies in their buildings. If the odour and smoke is offensive, then it can be declared to be a nuisance, and can be banned via an Order from the Victorian Civil & Administrative Tribunal (VCAT). The key to remember here is that the activity complained of must be objectively unreasonable, not subjectively unreasonable, meaning that an ordinary person would need to find the smoking to constitute a nuisance.

Similarly, if the problem is spread throughout a building and on many levels, then an Owners Corporation may pass an additional Rule to restrict smoking on common property, and to restrict smoking on balconies where that may cause nuisance to other residents. The Additional Rule would need to be passed by a Special Resolution at a General Meeting of the Owners Corporation. Even if the Special Resolution does not pass, a lot owner or group of residents may appeal the decision to VCAT to have the Rule passed and registered in any event.

On a policy front, the smoking of cigarettes shall continue to be marginalised by lawmakers in the years to come, to the extent where smoking cigarettes may even be banned in apartment buildings altogether. It is only a matter of time until new developments will have compulsory rules registered to ban smoking in all areas of the building. But will Victoria be the first State in Australia to pass laws to essentially make new buildings ‘smoke-free’?  I would think so.

Special Resolutions - Strata Title Lawyers

Special Resolutions require special attention

By-laws, Rules, Governance, Strata Management Industry

Owners Corporations need to be aware that, before they can commence legal proceedings against any party in any Court or Tribunal, they must first pass a Special Resolution at a General Meeting of the Owners Corporation.

The exception to this rule is where the Owners Corporation is either enforcing its rules or seeking to recover levies.

A special resolution requires 75% of the total value of unit entitlements of the building to be passed in favour of the motion, either at a General Meeting or through a ballot or ‘postal vote.’

Developers and builders (who are most often the target of legal proceedings being filed by Owners Corporations) are aware of this particular law, and are only too happy to sell a 25% stake in buildings to overseas investors in non-English speaking countries. This makes it difficult for an Owners Corporation to secure enough votes to file legal proceedings, as it must rely on these overseas investors to sign and return their ballot in favour of the resolution.

It is also possible to obtain a Special Resolution by passing an interim Special Resolution, whereby the resolution is passed by 50% of the value of unit entitlements, and where no more than 25% of the building petitions the Secretary against the Special Resolution within 29 days.

The 75% threshold is a curious notion for the Victorian lawmakers to settle on. In New South Wales and Queensland for instance, the identical motion only requires 50% of those that turn up to the meeting or send proxies to vote in favour of the motion.

It seems that in those States, if over half of the building approves of the decision, then that’s an appropriate policy position to adopt.

As it stands, there is too much risk that a ‘fractured’ building, one where a vocal minority can act to quell a mainly apathetic majority, and deny residents that chance to air legitimate claims in the Court. It is hoped the lawmakers of Victoria shall re-visit this particular issues when it next conducts a review of the legislation.

San Francisco's Air BNB Law - Strata Title Lawyers

San Francisco's 'Air BNB Law' ought to be considered by lawmakers here

By-laws, Case Law, law reform, Rules, Short-term Lets

In San Francisco, the City passed a new Ordinance into law in October to better regulate the renting out of rooms and apartment dwellings to short-term stay travellers and tourists

It had always been unlawful in many US cities – including San Francisco and New York – for landlords and lessees to let their apartments out for periods of less than 30 days to any one person or group of persons.

Under the proposed new Ordinance in San Francisco –it will still be unlawful for landlords and lessees to let their apartments out for less than 30 days, however – the new Ordinance provides the flexibility for people to rent their dwellings out through sites such as Air BnB for 3 months in any given year. In addition, the landlords and lessees must register with the City, and sign a declaration under threat of perjury to comply with the limits imposed under the Ordinance. Ultimately, the owners must also pay commercial rates or ‘hotel’ rates on the dwellings during the short-term stays.

This is the type of law that should be welcomed to Australian shores and adopted by Australian lawmakers, particularly in Victoria. Planning Minister Matthew Guy promised law reform in this area for Docklands 18 months ago, however no progress has been made with the Ministry since then. Consumer Affairs Victoria has an outstanding opportunity to legislate on the back of this precedent set in San Francisco, a move which has been welcomed by the short-term stay industry itself, Air BnB included.

A 30 day minimum stay rule ought to be imposed on all dwellings in the metropolitan areas, and the local Councils would benefit from increased rate revenue from the commercial rates imposed on those who would seek to short-term let their apartments. The issue of short-term stays currently divides the city, and the issue is crying out to be resolved by clear and unambiguous legislation. The current practice of leaving Owners Corporations to litigate in the Courts and Tribunals is cumbersome and expensive for all concerned, and it ought to cease. There exists an opportunity to strike a legislative balance between the rights to enjoy one’s own property in quiet peace and enjoyment versus the right to lease and let one’s own property to others with reasonable flexibility.

San Francisco have got it right. It's time for Melbourne to follow suit.

Personal injuries and Owners Corporations

Personal injuries - a warning for Owners Corporations

Common Property Repairs, Governance, Rules

Two recent decisions in the Supreme Courts of Victoria and NSW should be mandatory reading for all executive committee members of Owners Corporations in exercising decisions relating to repair and maintenance of common property.

In the decision of Brown v OC201532U, the Victorian Supreme Court awarded damages of over $600,000 plus legal costs to Mr Brown, who suffered an injury while attempting to scale a common property fence and gate that was in disrepair. The Owners Corporation knew the rear fence and gate was not functioning, however delayed carrying out repairs while it attended to other matters, although intended to repair the common property in the future and as funds became available. The Court found the injury sustained by Mr Brown was reasonably foreseeable, and that the Owners Corporation owed Mr Brown a duty of care not to allow that injury to occur.

In the decision of Taylor v The Owners – Strata Plan 11564, Mr Taylor was tragically killed when an awning on a shopfront failed and fell on top of him as he was walking underneath. Similarly, the Owners Corporation knew of the potential danger but did not take active steps to repair the awnings. In the Supreme Court of Appeal in NSW, the estate of Mr Taylor continues to litigate regarding the exact quantum of damage which the Owners Corporation must pay. This is because, prior to his death, Mr Taylor ran his own business and was also engaged in property development. He had three children by a previous marriage, and three stepchildren via his second marriage. Several of the children are claiming compensation for injury, loss, harm and damages arising from recognised psychiatric and psychological injuries.

It should be noted that most insurance policies will provide indemnity for acts carried out by executive committee members. However, almost all of the insurance policies shall contain a clause that indemnity will not be extended to those Committees that make negligent or bad-faith decisions.

The simple lesson to be heeded for Owners Corporations – take proactive steps to regularly inspect common property, and when it is discovered that an item of common property is in a state of disrepair, don’t delay carrying out the repairs.

Overcrowded sublet apartment - Strata Title Lawyers

Overcrowding of apartments

law reform

It has long been an issue for apartment dwellers in Victoria and all around Australia: the common scenario is that a residential unit is let out to a person for a set amount of rent each week; that person then sets out partitions and curtains throughout the apartment, then sub-lets the apartment to groups of (mainly female) students and / or non-English speaking persons.

The results are usually a large profit to the head-lessee, squalid conditions for the sub-lessees, and increased wear and tear on common property facilities for Owners Corporations from increased rubbish and drainage blockages.

However, there is an added sting in the tail for Owners Corporations: their insurance policies will most likely contain a clause requiring full and frank disclosure of circumstances that may cause damage to the building, and the duty of utmost good faith requires an Owners Corporation to take positive steps to mitigate those risks, otherwise coverage by the insurer may be denied.

In 2013, 3 students living in an over-crowded apartment in Bankstown ignited a fire after lighting a cigarette on the balcony. In high winds, the embers lit the partitions and curtains inside the apartment. Next to go were the LPG canisters in the kitchen that doubled as alternate cooking facilities. The results were catastrophic – one student was killed leaping to the ground floor, and another was critically wounded and burned. The apartment building suffered extensive smoke damage, with 80% of the apartments unable to be resided in for at least six months. In this instance, members of the Owners Corporation knew of the overcrowded apartment, yet took no action.

An Owners Corporation should report all instances where they suspect overcrowding of apartments to the City of Melbourne.

Council Officers have the powers to inspect private property, and the above scenario would most likely offend town-planning rules and would be considered to be a boarding house activity in the Docklands Precinct. The Council would most likely eject those that are unlawfully residing there, and impose a heavy fine on the landlord responsible.

Rules of the Owners Corporation

Enforcing rules and achieving compliance with minimum community standards

By-laws, Governance, Rules

Owners Corporations and Committees have enough on their plate in maintaining common property and attending to the financial management of the building without getting involved in matters where owners and occupiers are breaching the Rules of the Owners Corporation.

However, adopting a rigorous Grievance process will at least ensure that only the most serious disputes will be unresolved and later ventilated at VCAT.

When advising Owners Corporations on these matters, if the offending involves a tenant or occupier of the unit, I advise Owners Corporations to issue a breach notice against both the owner AND the tenant / occupier. Often, the owner (being a landlord) will have little or no idea that their tenant is causing grief to other residents within the Building.

Most Rules available to the Owners Corporation will use wording such as “A lot owner or occupier must not, or must not cause to permit…” which gives an Owners Corporation the discretion to take enforcement action against either or both the owner and the tenant / occupier.

By issuing a breach notice to both Parties, and offering to meet with the Parties in a meeting with the Grievance Committee, it is usually the case that the Owner will step in and regularize the matter before the Meeting, either by taking steps to evict the tenant or making sufficient reparations on behalf.

There ought to be no place for warning letters or ‘quiet words’ by the Building Manager in enforcing the Rules of the Owners Corporation. Either there has been a breach or there has not. If the offending party can be positively identified, the Owners Corporation should always issue a Breach Notice, otherwise the offending party might conclude there are no consequences to their bad behaviour.

Other owners and residents have the right to live in their units and to traverse the common property without suffering acts of nuisance from other owners and residents. There ought to be no second chances given. Rules should be seen by all residents as no more than minimum community standards.

True enough, a person issued with a Breach Notice does not have to participate in or attend a Grievance Committee Meeting, however if they breach the Rules again, then a Final Breach Notice ought to be issued straight away. For recidivist offenders, sometimes the only way to enforce compliance is to burden them by taking their time away to attend Meetings and Tribunal proceedings, and in appropriate circumstances, ensuring that financial penalties in the form of VCAT fines are imposed against them.

The many trials and tribulations of committee members

Common Property Repairs, Governance, Meeting Procedure

Being a Chairperson, Secretary or Committee Member of an Owners Corporation can sometimes be a thankless task; after a long day at work, and after attending to domestic duties at large, these voluntary members must then meet at unsociable hours to discuss and manage the affairs of the residential buildings they live in, and to ultimately make binding decisions with important repercussions for all residents.

The functions and duties of Committee Members are contained within the Owners Corporation Act 2006, and include core concepts such as maintaining and repairing common property, keeping the building insured, ensuring that the rules of the Owners Corporation are enforced, and ensuring that the Owners Corporation has sufficient funds in its accounts to pay its bills.

Stepping outside those core functions and duties are permissible, as most Owners Corporations will allow the Committee to be delegated all functions and powers of the Owners Corporation at the Annual General Meeting. However, Committee Members ought to be extra careful when stepping outside the bounds of their core functions and duties.

A code of conduct applies to Committee Members under the Owners Corporation Act 2006, requiring members to act honestly and in good faith in performing their functions, and to exercise due care, skill and diligence in every decision they make, or do not make as the case may be. The insurance industry offers protection and cover for Committee Members that make bad decisions, however only if it can be proven that the Committee made the bad decision in reasonable belief that the decision was in the best interests of the Owners Corporation.

Committee Members should not feel comforted by the protection offered by insurers. Any lot owner may file proceedings in VCAT if they believe that a decision made by a Committee was made in bad faith and without due care. The key lesson for all Committees when considering potentially contentious issues are to seek advice early and often, from their Owners Corporation managers and from appropriately-qualified and insured service providers. Whether it be legal advice, engineering advice or from financial services professionals, reliance on that advice from others would help to shield Committees from shouldering the entire blame for contentious issues gone wrong. Moreover, if individual committee members feel uncomfortable or pressured about a certain proposed course of action, they should seek the decision be deferred so that appropriate advice can be sought.  In Strata land, there are no prizes for making hasty decisions.

Paying strata levies on time

A better way: incentivizing owners to pay levies on time

Governance, Rules

Taken from the Strata Community Australia (SCA) Benchmarking Survey, 6.09% is the Victorian national average of strata owners that have their levies in arrears for greater than 30 days.

While this may not seem like a large number – what this does mean is that, in any given building in Melbourne, Owners Corporations ought to be setting budgets that are in excess of 100% of planned expenditure, to account for late payers and the prospects of paying (sometimes substantial) legal professional fees to chase the late payers in VCAT and the Courts.

It can take between six to twelve months to obtain a judgment for levy arrears in VCAT, and to enforce that judgment via the Sherriff’s office (for individuals) or via the Federal Court (for companies).

However, it occurs to me that Owners Corporations could be doing more to incentivize lot owners to pay their fees and levies as they fall due and payable. Apart from setting budgets at 110% of actual planned expenditure, an Owners Corporation could adopt a discount for those that pay on or before the due date. Similar to the methods employed by Utility companies for gas and electricity bills, a prompt payment discount would reward those owners that do the right thing and pay their fees on time.

The other message is for the Owners that do fall behind on their levies: the most common reason for non-payment of fees on time is because lot owners don’t receive a copy of the quarterly levies in the post. Not surprisingly, this is no defence for not paying the Fees, and if the Owners Corporation has incurred Fee Collection Charges for sending Letters of Demand and Final Fee Notices, then the Owner will need to pay those charges and any interest in addition to the Levy amounts. So, if you change address, ensure that the Owners Corporation Manager is given notice of the new contact details.

And if Owners know that they don’t have sufficient funds to pay the Levies, the best thing to do is to pick up the phone and tell the Owners Corporation Manager, so that a payment plan can be drafted. There is no shame in admitting that you can’t pay on time. All of us experience cash flow issues at various times in our lives. An agreement to catch up the quarterly levy by paying a few hundred dollars per month will mean both the Owner and the Owners Corporation can avoid incurring the late payment collection fees charged by many management companies and law firms.

AGM season - Strata Title Lawyers

Preparing for the AGM season

Governance, Meeting Procedure

For a large number of Owners Corporations this time of year is AGM time. If not, then at some stage in the not too distant future, it will be!

The AGM is a compulsory meeting, and must be held every 15 months at maximum.

All the usual motions must be put and resolved at the AGM – the existing Committee must present their reports, a budget must be set and new levies struck, a new Committee must be elected, and the Owners Corporation must decide on its level of insurance and whether an audit should be done on their accounts.

However, contrary to what most think, the AGM is not the venue for airing grievances and raising complaints about the day to – day management of the building or the structure of the affairs of the Owners Corporation. Of course, the Chairperson has the power to invite owners to table ‘general business from the floor’ but unless there is a specific motion on the Agenda to discuss and decide on a specific issue, then itotherwise cannot be raised nor resolved.

The key point for owners who wish to raise a particular issue for discussion and debate is to seek to formally put that motion on the Agenda for the AGM. This involves either requesting the Secretary, Chairperson or the Committee to include the motion on the Agenda, or by requisitioning the motion by petitioning other owners to sign a form to support the motion being included on the Agenda.

If neither of these options are viable, the lot owner may have to raise the issue via the complaints process under the Model Rules or under the dispute resolution section of the Owners Corporation Act 2006.

Remember also that proxy votes for the AGM will only be valid if (i) the correct and prescribed form is used, and (ii) the form is submitted on time, and (iii) that the owner or owners of the lot do not owe any levies or fees at the date of the meeting, and (iv) only if the form is signed by all owners shown on the roll of owners and the Certificate of Title.

If the lot is owned by a company, trust or self-managed super fund, then extra documentation may need to be submitted with the proxy form to prove the execution of the proxy is valid and that appropriate delegations have been made by the company or trust.

Postscript:

Participation on the committee by resident owners in particular, is going to be of critical importance for the future of [Docklands / Southbank / Central Melbourne].

It is well-documented that the number of owner – residents in the community are falling, as local and overseas investors continue to acquire these apartments in large numbers. Only the resident owners in these buildings will have the knowledge and context to keep oversight of the smooth running of the building on a day to-day basis and to ensure that the costs of running the Owners Corporation are kept in check.

Good luck with your Meeting Season!

Personal injury claims - Strata Title Law

Owners Corporations and personal injury claims - a cautionary tale

Case Law, Common Property Repairs

Two recent decisions in the Supreme Courts of Victoria and NSW should be mandatory reading for all strata managers and executive committee members in exercising decisions relating to repair and maintenance of common property.

In the decision of Brown v OC201532U, the Victorian Supreme Court awarded damages of over $600,000 plus legal costs to Mr Brown, who suffered an injury while attempting to scale a common property fence and gate that was in disrepair. The Owners Corporation knew the rear fence and gate was not functioning, however delayed carrying out repairs while it attended to other matters, although intended to repair the common property in the future and as funds became available. The Court found the injury sustained by Mr Brown was reasonably foreseeable, and that the Owners Corporation owed Mr Brown a duty of care not to allow that injury to occur.

In the decision of Taylor v The Owners – Strata Plan 11564, Mr Taylor was tragically killed when an awning on a shopfront failed and fell on top of him as he was walking underneath. Similarly, the Owners Corporation knew of the potential danger but did not take active steps to repair the awnings. In the Supreme Court of Appeal in NSW, the estate of Mr Taylor continues to litigate regarding the exact quantum of damage which the Owners Corporation must pay. This is because, prior to his death, Mr Taylor ran his own business and was also engaged in property development. He had three children by a previous marriage, and three stepchildren via his second marriage. Several of the children are claiming compensation for injury, loss, harm and damages arising from recognised psychiatric and psychological injuries.

It should be noted that most insurance policies will provide indemnity for acts carried out by executive committee members. However, almost all of the insurance policies shall contain a clause that indemnity will not be extended to those Committees that make negligent or bad-faith decisions. In both the Brown & Taylor cases, the Courts found the Owners Corporations were negligent or otherwise breached a duty of care in failing to repair common property. It is therefore unlikely that their insurer would have extended coverage to them, leaving all of the members of the respective owners corporations to pay their share of the damages and legal costs.

The simple lesson to be heeded for Owners Corporations – take proactive steps to regularly inspect common property, and when it is discovered that an item of common property is in a state of disrepair, don’t delay carrying out the repairs.

NCAT replaces CTTT - Strata Title Lawyers

NCAT - 2014 heralds new super-tribunal for NSW

CTTT, Government Intervention, law reform

On 1 January 2014, New South Wales new ‘Super-Tribunal’ – NCAT – comes into existence, replacing the former Consumer & Trader Tenancy Tribunal (CTTT).

What does the new procedure mean for owners corporations and owners / residents in the Strata & Community Schemes Divisions?

For starters – the Transitional Provisions make it clear that any existing applications filed before 31 December 2013 will still be considered under the CTTT’s jurisdiction and legislation.

By way of background – In the Strata and Community Schemes Division, the dispute resolution process works like this: any grievance must first be mediated (or attempted to be mediated) with Fair Trading. The statistics show that Fair Trading’s mediators resolve around 70% of grievances lodged in any given year. Should mediation fail to resolve the grievance, any party to the grievance may file for orders by an Adjudicator. The Adjudicator receives evidence and submissions in written format, and the other parties are given an opportunity to respond in writing. Thereafter, the Adjudicator issues a binding decision. In the event the Adjudicator’s decision is unsatisfactory, an aggrieved party may appeal the decision to the Tribunal, for an oral hearing by a Member of the Tribunal.

In our view, the single biggest issue from a practitioner’s point of view with the-then CTTT was the inefficiency in processing applications and making decisions at both Adjudication and Tribunal level. The establishment of the procedures and powers of NCAT has dealt with this issue by creating an internal appeals panel. In practice, this will mean that an appeal of an Adjudicator’s decision to the Tribunal is no longer automatic; the Appeals Panel (made up of Senior Members of the Tribunal) can only allow an Appeal to be filed and proceed to the Tribunal for an oral hearing if the Panel concludes that there has been a substantial miscarriage of justice because (i) the decision was not fair or equitable, or; (ii) the decision was against the weight of evidence; or (iii) significant new evidence has arisen.

We applaud this new initiative, as less than meritorious appeals will now be prevented from proceeding to the Tribunal, freeing up the number of Appeals and Hearings, and allowing the Tribunal Members’ increased time for writing decisions. This also means the importance of filing sufficient evidence and submissions at the Adjudication stage shall become all the more crucial to the success of any Application.

Docklands, Melbourne - Strata Title Lawyers

Victorian Government to ban serviced apartments in Docklands

law reform, Short-term Lets, Government Intervention

Victoria’s Government says the Docklands residential towers were never intended to be used as hotels, and will pass legislation to prevent serviced apartment businesses from operating.

Following the litigation between the City of Melbourne, the Watergate Apartments Owners Corporation, and a serviced apartment operator, Victorian Planning Minister Matthew Guy has announced that it was never the intention that the Docklands residential towers could be used for hotel-style accommodation.

It will remain to be seen as to whether the business of serviced apartments will be prohibited or restricted only in the Docklands are or within the wider Melbourne Metropolitan region.

It will also be interesting to hear the details as to whether serviced apartments will be restricted based on town planning grounds or fire and life safety grounds under the Building Code.

The announcement demonstrates a massive show of support from the government to the Docklands Community in seeking to complete the vision of Docklands being a thriving community with a permanent residential population.

Let the Owners Corporations of Docklands rejoice. And three cheers to the Watergate Apartments for bringing this important issue to a head.

Follow the link to watch a video from the ABC News about this issue that aired on Friday July 19 2013.

 

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