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 also act for a range of international clients, and advise government agencies on policy and regulation.

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 $450 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 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, and in VCAT.

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


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 or by telephone 02 9091 8068.

Ciro Figaro

Senior Associate

Ciro is a Solicitor admitted to the Supreme Court of NSW and joined STL in February 2015.

Ciro is specialised in both contentious and non-contentious strata work including:

  • Building defects matters
  • Drafting and reviewing building contracts
  • Compulsory property acquisitions
  • Grants of easements, licences and leases
  • Dividing Fences Act claims and Tree disputes
  • Tortious claims
  • Applications for breach of by-laws
  • Drafting and reviewing by-laws
  • Compulsory strata management
  • Strata Management Agreements and Building Management Agreement
  • Collective Sale and redevelopment of Strata Schemes
  • Embedded Network Agreements

Before joining STL Ciro also practiced in different areas of law in Australia and in Italy such as contract law, conveyancing and criminal law and he has a deep understanding of comparative studies.

Ciro completed a Bachelor of Laws and a Master of Laws with “honours” in Italy in 2009 and while working full time in a strata management company Ciro studied at University of Sydney to bridge his qualification in Australia.

Ciro has been featured in articles published by the College of Law and recognised for his hard work and commitment to the legal profession both in Australia and overseas.

Ciro is a member of the Law Society (NSW), a Committee Member of Young Lawyers Property Law NSW, a registered Italian Legal Practitioner (C.N.F. - Consiglio Nazionale Forense), member of ALTO and a member of City of Sydney Law Society.

Ciro is an active member of the Strata Community and the author articles in the Australian Business Network Magazine.

Ciro can be contacted by email at or by telephone 02 9091 8068.

Read the College of Law's most recent article featuring Ciro titled "Strata Schemes Prevented from Peeves and Blanket Bans" here.

Read the College of Law's recent article "Two Cats, a Dog, a Busy Wife and Newborn Son: Inside WFH Life with Strata Lawyer Ciro Figaro" here.

Emma Swords

Associate Lawyer

Emma holds a Bachelor of Laws with Honours and a Bachelor of Arts (Psychology) from Macquarie University, and was admitted as a solicitor in the Supreme Court of New South Wales in October 2016.

Emma joined the team at STL in August 2020, and brought with her a wealth of experience acquired over 8 years of working in litigation and dispute resolution in Sydney for two CBD commercial litigation firms.

Emma specialises in handling contentious matters for our Owners Corporation clients in Sydney and in Melbourne, and handles NCAT, VCAT and Supreme Court proceedings in the areas of:

  • Commercial Claims for breach of contracts
  • Dissolution of Building Management Agreements / Service Agreements
  • Common Property Repair Claims
  • Enforcement of By-Law Claims
  • Applications for Compulsory Appointment of Managers
  • Collective Sales and Strata Renewal Process Claims

Emma can be contacted by email at or by telephone on (02) 9091 8068.


Hayley Sutherland


Hayley joined the STL team in October 2017 with over 10 years’ experience in various aspects of the property industry including conveyancing, leasing and mortgages.    

In her capacity as an employed solicitor, Hayley handles the following matters:

  • Advice to owners corporations in respect of the legality of by-laws, the rights and obligations prescribed by legislation and contractual rights and remedies
  • The drafting of custom by-laws governing renovations by lot owners, rights of exclusive use and the management / control of strata schemes
  • Comprehensive reviews of by-laws 
  • Consolidations and registrations of by-laws 
  • The granting of easements and leases

Hayley completed Macquarie University's Conveyancing Law & Practice qualification in 2010, and the Legal Profession Admission Board's Diploma in Law in 2017.

Hayley can be contacted by email at or by telephone 02 9091 8068. 

Akeel Sumar


Akeel holds a Bachelor of Laws and Bachelor of Business Administration from Macquarie University and was admitted as a Solicitor to the Supreme Court of New South Wales in May 2020.

Having joined STL in April 2019, Akeel works across all practice areas but is primarily involved in by-law review and consolidation.

Akeel has already built a strong foundation in property law and conveyancing having worked for a legal services and information firm. He also has experience in the banking and financial services industry through his previous role with a large multinational financial institution. 

Akeel can be contacted by email at or by telephone 02 9091 8068.

Vivien Hammond

Office Manager

Vivien joined STL in March 2015 and brought with her a wide range of professional experience across a number of industry sectors. She has a wealth of experience in broad-spectrum office management competencies including cloud based technology, bookkeeping, human resource management, graphic presentation, social media, marketing and company secretarial.

Vivien can be contacted by email at or by telephone 02 9091 8068.

Dana Alberto

Graduate Lawyer

Dana has recently completed her Bachelor of Laws and Bachelor of Media at Macquarie University and is presently undertaking studies at the College of Law.

She joined STL in November 2020 and provides general support and assistance to the team, primarily with by-law review and consolidation, preparation of legal documents, and filing.

Dana has developed a broad foundation with various clerical and administrative duties, with experience at a workers trade union and as a law student volunteer for a not-for-profit community organisation. She also has experience in multimedia production, having studied in the USA at Butler University and interned at a major Australian television network.

Dana can be contacted by email at or by telephone 02 9091 8068.

Amanda Stojanovska

Graduate Lawyer

Amanda has recently completed her Bachelor of Laws and Bachelor of Business, majoring in Finance, at the University of Technology, Sydney.

Having joined STL in October 2021 as a paralegal, she assists the team with day-to-day activities; preparation of legal documents, general filing and admin and has a particular interest in by-laws and building defects. 

She brings with her a strong foundation for organisation, attention to detail and communication skills gained whilst working in her previous role with a fast-paced COVID-19 response project for Patient Transport Service, as well as with a large multinational financial institution.

Amanda can be contacted by email at

Latest News


More Buildings with High-Risk Combustible Cladding Added to the List, As the Government Ponders What to Do Next

Combusible Cladding, Lawyer, strata, Strata Law

Cladding Safety Victoria (CSV), the state agency tasked with administering the rectification of residential apartment buildings affected by high-risk combustible cladding, has admitted that there are nearly 50% more buildings in the high-risk category than previously reported.

The statement made by CSV in October, as reported by the Australian Financial Review, confirmed that there are now 735 buildings in Victoria with high-risk combustible cladding in need of removal. This is a large increase from the original estimate of 500 buildings that the Victorian government estimated it would need to fix.

It has become increasingly clear to all involved in the industry that the State government simply does not have the funds, nor the conviction to repair all of the affected buildings. Best estimates would be that between 150 – 350 buildings could be rectified over the next 24 months before the CSV is slated to be wound down.

To prepare owners of buildings for the upcoming disappointment, the Victorian Parliament passed an amendment to the Building Act (known as the Building Amendment (Registration and Other Matters Act) 2021) that now provides Owners Corporations with an enlarged time period of 15 years (from date of completion) to bring a legal claim against the builder or developer or other stakeholders for contributing to costs to remove the cladding.

As readers of this column would remember from previous articles, I have long been taking pot shots at the Owners Corporation Act reforms, because under those reforms, an Owners Corporation will still be required to pass a special resolution or interim special resolution to bring a cladding action (if the cost of the cladding rectification will exceed $200,000).

Most buildings will encounter repair costs in the region of $500,000 - $5 million depending on the size of the building, and the extent of the presence of the cladding.

The net result of all of this to’ing and fro’ing is that there will be a large number of dangerous buildings of an extreme fire risk classification that will remain unrepaired for a very long time. There will also be a large number of buildings that will enter into very expensive remedial contracts to repair their buildings themselves, and the owners within those buildings will face massive costs and high annual fees. There will also be a large number of buildings that will embark upon lengthy and costly litigation to hedge their bets against the high remedial costs, and these legal cases will take years to resolve.

All in all, it is a bonanza for lawyers, insurance firms, remedial builders, project managers and scaffold-hire companies. And this will be to the great detriment and frustration of all those Victorians who own or live in an affected apartment. This will cost countless livelihoods, and will place incredible strain on communities.

The government has a bigger role to play here, and they are failing. The people of Victoria await the government’s response to this issue.

VCAT Rules That Pigeon Infestation in Apartment Building Not Enough to Justify Special Levy

Lawyer, Strata Lawyer, Strata Law, strata, VCAT

An Owners Corporation in St Kilda has found itself in a messy situation in VCAT, with the Senior Member refusing to enforce an Owners Corporation request to certain lot owners to rid the main apartment building from a pigeon infestation.

The building comprises a main multi-storey block of residential apartments, together with ground floor retail.

Lots 1 and 2 of the development are 3-storey townhouses on an adjacent block but still part of the overall Owners Corporation. The lot entitlements for these townhouses are 4 times higher than a 1 bedroom unit in the Main Apartment Block.

The Owners Corporation sent a letter to all owners advising that an Urgent Special Levy was being raised to cover the costs of ridding the Main Apartment Block of pigeons, cleaning the decorative façade of the Main Apartment Black, and also to cover the additional costs of an increase to insurance costs. Accompanying the letter was an invoice for the lot owners for special levies totalling $3,656.31.

The lot owners paid that portion of the levy comprising the increased insurance costs, but disputed the payment of the pigeon levy which remained unpaid.

The OC wrote back to the lot owners acknowledging that they received an indirect benefit from the pigeon control works only, applied the benefit principle and reduced the levy by 50% overall.

This still did not satisfy the lot owners and the matter proceeded to a hearing at VCAT.

The OC submits that the lot owners received an indirect benefit from the pigeon control works undertaken on the multi storey building as follows:

  • potential for reduced insurance premiums;
  • reduction in adverse health effects and injury to residents and visitors;
  • potential increase in property value;
  • improved appearance of the complex; and
  • minimised pigeon infiltration.

The lot owners disagreed, and said, there is no evidence to substantiate any reduction in insurance premiums as a result of the pigeon control works, and that insurance premiums have increased.

Secondly, there is no risk of adverse health effects and injury to residents and visitors as the townhouses are located in an adjoining building;

Thirdly, there is no potential increase in property value as the townhouses are in a separate building, with an address on a different street;

Fourthly, no works are being conducted to the townhouses, which presents as a separate building, so there is no benefit of improved appearance for the townhouses, and fifthly, works undertaken on a separate building will not minimise infiltration to the townhouse and may potentially drive the pigeons towards the building in which the townhouses are located.

The VCAT member found that there was some indirect benefit to the townhouse owners, as the risk of health issues, slippage, and increased insurance claims is a risk borne by all lot owners in the subdivision, indeed the payment of insurance levies is raised by owners corporation 1, of which all lot owners in the subdivision are members.

The townhouse owners also received an indirect benefit from the pigeon control works in respect of the appearance of the multi storey building and a potential increase in property values. Being part of the same subdivision the condition, and appearance of the multi storey building will be of relevance and concern to any potential purchaser – a pigeon infestation or poor appearance of the multi store building is therefore likely in the Tribunal’s view to impact on the property values of the building in which the townhouse is located.

However, overall, the Owners Corporation’s exercise of the benefit principle of 50% was still far too high for the VCAT’s liking. The levy was tossed out by the VCAT, and the Owners Corporation will have to start all over again.

This case reinforces that Owners Corporations need to be very careful in how they apply the benefit principle. Even a 50% discount is sometimes not enough.

Owners Corporations Are Like a Box of Chocolates – You Never Know What You’re Going to Get

Strata Law, Strata Lawyer, Owners Corporation, By-laws

In the major newspapers, there seems to be a negative news story almost every week 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 cladding issues are being poorly managed by the state government and so on.

While I’m sure there is a measure of truth to these stories, 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.

If You Know Where to Look (and Who to Look to) There Are Potential Options for Much Lower Compliance Costs to Rectify Combustible Cladding

Strata Law, Strata Lawyers, Owners Corporation, Combustible Cladding

The state of Victoria has the most buildings with combustible cladding, as the latest state audit figures show. The Australian Financial Review reported last week that Victoria has 1610 privately owned buildings with ACP or aluminium composite panels.

The government has a target to rectify the facades of the most urgent buildings, starting with a list of 50 buildings to complete before the end of 2023. Unfortunately, the majority of those 1600 buildings will have to be rectified at the owners’ cost as the government’s $300m fund will not stretch far enough to compensate for all of the buildings.

However, full cladding removal is not necessary in all buildings, as the location of the panels and the installation of non-combustible concrete materials separating the combustible cladding from the rest of the façade can actually be considered an acceptable alternative solution under the Building Code of Australia.

The process involves a Fire Engineer and Building Surveyor to agree on an Alternative Solution, and then an application can be lodged with the Building Appeals Board to have the Municipal Building Surveyor (Council) and Fire Rescue Victoria sign off on the alternative solution.

Owners Corporations that have been issued with an Order or Notice from Council should engage a lawyer and fire engineer early in the process.

An example reported in the AFR shows that a simple 30 minute test conducted three times on 100 per cent polyethylene core panels taken from the building and separated by a metre-tall concrete slab representing the protruding panel separating the combustible panels and glazing, showed fire did not spread upwards

The test showed fire was unlikely to jump between facade panels on a 24-storey Melbourne apartment tower, because a 1-metre-wide concrete layer separating the panels was sufficient to prevent the upwards spread of flame.

The test results showed that a Melbourne high-rise could stay safely be inhabitable with about $40,000 worth of work instead of a $4 million replacement of all combustible panels.

“We need to have confidence that it’s safe to leave the cladding on,” said Mr Jonathan Barnett, the managing director of consultancy Basic Expert, who spoke to the AFR’s Michael Bleiby.

“What it proves is that for many buildings we probably could leave the panels on.”

Under that plan, the aluminium composite cladding would stay on the tower, with the exception of a first-floor section of 12 panels above a driveway that could be ignited by a vehicle fire. A new cover would also have to be built over the rear exit of the building to shelter exiting residents from falling debris if there was a fire.

The test, which cost about $100,000 to stage, shows a way to bring much-needed nuance into consideration about rectification of buildings with combustible panels. Globally, little work has been done to conduct real-life tests of fire spread, as the burden of paying for them falls to the resident owners of the buildings.

But if enough tests were done on a wide enough pool of buildings, a database could be built up to inform policymakers and regulators about the best – and most affordable – remedy for residents, many of whom struggle to foot hefty cladding bills, Mr Barnett said.

“Until we have more information about how these panels burn, we’re going to have to do more tests,” he said.

“That catalogue of knowledge doesn’t exist anywhere in the world.”

Victorian Budget Provides Stamp Duty Concessions to Some Apartment Buyers in a Bid to Get Sales Rolling Again

strata, Strata Lawyer, Owners Corporation, Strata Law, By-laws

The Victorian Government announced new measures as part of its Budget for the 2021 / 2022 year to incentivise homeowners and investors to speculate on new apartments in the Melbourne area.

The measures include widening the scope of the “off-the-plan” duty concession to cover higher value properties for purchases made under contracts entered into on or after 1 July 2021, resulting in stamp duty savings.

We have also seen an increase in the “off the plan” dutiable value ceiling to be raised from $750,000 for first home buyers to be raised to $1 million to all buyers.

There is also a 100% stamp duty exemption for purchases of new residential property that has been unsold for 12 or more months since completion with a dutiable value of up to $1 million, which includes the Melbourne CBD, Docklands, Southbank, South Yarra and other popular Melbourne suburbs. For a $1million apartment, this represents a saving of $27,500.

This is a positive change for those that wish to buy an apartment to live in, which should hopefully result in increased demand for apartments, particularly in the CBD, and may in turn incentivise developers to green-light construction projects that they might otherwise land-bank and otherwise wait for more favourable conditions.

However, beware home buyers that are looking to purchase a new apartment for more than $2 million, as you should consider whether to enter into a contract before 1 July 2021, depending on eligibility for the ‘off the plan’ duty concessions.

By way of example, in the absence of any duty concessions, a home buyer looking to purchase a premium residential apartment in Victoria off-the-plan for $4,000,000 on or after 1 July 2021 would be liable for duty of $240,000 based on the new premium stamp duty rate.  However, if the off-the-plan contract is entered into before any construction starts, the buyer may only have to pay duty of $55,000, resulting in a saving of $185,000 (approximately 77%).

In the above example, the buyer is in a better overall position by signing the contract on or after 1 July 2021 – if the buyer were to sign the contract prior to 1 July 2021, the buyer would not qualify for the off-the-plan duty concession and would have to pay duty of $220,000 (calculated at the rate of pre-1 July 2021 rate of 5.5%, on the contract price of $4,000,000).

In my view, it is so important to increase the capital values of the existing apartments in Melbourne, as for far too long, the values have remained static relative to say, the cost of stand-alone dwellings.

The answer is not to pump the market with thousands more of new apartments. There is simple demand and supply economics to consider. The Victorian Government needs to understand that investors and owners are rightly worried about combustible cladding, building defects and quality and the relative amenity and liveability of these apartments.

The best incentive to get owners and investors moving back into purchasing apartments is to improve governance, and fix the cladding crisis.

Once capital values start to rise, just you watch. I bet that thousands of existing apartments will start to be bought and sold, because owners and investors will be able to cash in on a capital gain. This will fill the State’s coffers with stamp duty.

I really do think the Victorian government missed the boat here. We all know that stamp duty revenue is needed to repair the budget and pay for all the infrastructure projects this government is committed to.

Instead, it is simply offering incentives to its developer mates to keep the apartment building pipeline going. What a spectacular missed opportunity.

Noisy Neighbours in Apartment Above Results in a Tribunal Victory With Damages Awarded

Strata Law, Strata Lawyer, strata, Owners Corportion

Living in an apartment building brings with it all forms of minor inconveniences. Compromises are often required as part of every day life, as residents are required to live and put up with noise and reduced expectations of privacy, in return for the convenience of living in mixed-use neighbourhoods.

However, there has always been a difficulty in how to resolve issues between neighbours when everyday minor inconveniences stray into major problems and major nuisances and hazards.

The Owners Corporation is not the best arbiter of these disputes, because often it can become a matter of ‘he said/she said’ and there is a lack of objective evidence as to the true level of noise and behaviour.

However, recently an owner took another owner to VCAT and was successful in obtaining damages of $9,000 for breach of rules relating to noise and nuisance.

The building was a mixed-use retail-residential complex called ‘The Orchid’  located in West Melbourne.

The applicant claimed that she had been subjected to unacceptable noise coming from the unit above, and that rubbish had been thrown onto her balcony by the owner above, who lived there with his wife and three children, aged 8, 5 and 4.

The owner had been served with three Notices of Breach by the Owners Corporation, but the nuisance and noise had continued, eventually forcing the applicant to vacate her apartment and lease it out.

However, before the applicant moved out, she was forced to install a retractable awning on the balcony to prevent objects being thrown (at a cost of $3,500) and to install sound insulation in the ceiling of her apartment (at a cost of a further $4,000). There were further costs incurred in obtaining acoustic engineers reports and advice as well.

The VCAT member made findings that indeed there were several incidents where children were screaming on the balcony, and that objects had been thrown onto the applicant’s balcony, including food, toys and liquids. The VCAT member further found that the applicant’s decision to spend money on the awning and ceiling insulation, and to ultimately vacate the apartment due to the nuisance was “understandable and not unreasonable.”

The incidents of noise and throwing of objects had continued over a 14 month period virtually unabated.

In the circumstances, VCAT was readily able to find that the claim for nuisance was successfully proven, and that the damages claim was reasonable.

The case illustrates that lot owners and residents should not have to put up with objectively unreasonable behaviour from other residents and lot owners. A person’s right to quiet and peaceful enjoyment is never absolute, given that we live in a world where construction noise, traffic noise and ordinary noise coming from other apartments and buildings is a common occurrence.

However where that noise and nuisance crosses the threshold into unreasonable noise and nuisance, then the law shall respond accordingly, and where damages are not appropriate, VCAT and the Courts might even grant injunctions to prevent the noise and nuisance also.

New Owners Corporation Legislation Substantially Amends the Legal Position in Water Ingress Cases

Strata Law, strata, Strata Lawyer, Owners Corporation Law

A lot has been written and said about the new amendments to the Owners Corporation legislation, set to commence at the end of 2021.

I’d like to focus this article on an area which hasn’t got much traction and attention as yet, but which represents a big change to how an Owners Corporation must respond to complaints about water ingress from lot owners and occupiers.

Firstly, the law. The new act sets to introduce a new Section 17A into the Act, to clarify that any rainwater or other water that falls, occurs or flows on the common property (otherwise than in a waterway or a bore) is taken to be part of the common property.

Subsection (2) further provides that, for the purposes of section 8(4)(c) of the Water Act 1989, an owners corporation is the occupier of land to the extent that the land is common property, meaning that it will have the right to take and/or use water referenced in subsection (1).

The above wording might seem innocuous, and certainly the passage of water is not a very sexy subject, and it didn’t really attract many comments and objections at the public consultation stage, but consider the following:

Under this new legislation, if there is a burst pipe that causes water to escape onto the common property, then that water is considered to be common property water, and if that water causes damage to anyone else’s property, then the Owners Corporation will be responsible.

Hypothetically speaking, if a pipe were to burst from within an individual unit (say from a dishwasher, shower drains, bathroom sinks etc) and if that were to cause damage to multiple units below, then the Owners Corporation is prima facie, the responsible party to account for all of the loss and damage.

True enough, the Owners Corporation might well be able to claim back from the lot owner or occupier a portion of the costs if it could be proven that the cause of the burst pipe was from lack of maintenance or some other form of mischief as a contributory act. However, the responsibility and the costs of chasing the lot owner or occupier for that contribution might well be economically impractical or infeasible to do so.

I am not sure that the insurers of Owners Corporations will be thrilled by this legislative change. I would say that the insurers are changing the terms of their policies as we speak. Therefore, all Owners Corporations should be aware upon the renewal date of their policies to check the policy wording to see whether they are still covered for these types of claims.

In addition, if an Owners Corporation has the ability to pass special resolutions without too much expense, then my advice would be to pass updated additional Rules to pass responsibility to lot owners for any acts where water is permitted to escape their own internal services and cause damage to other lots and the common property, and to provide a mechanism for the debts to be paid upon demand. It may also be of benefit to consider passing a Rule to ensure that owners and occupiers are responsible for any insurance excess in the event that an insurance claim needs to be made.

Owners Corporations need to be careful to protect themselves, because left unchecked, this updated legislation put the Owners Corporation squarely ‘in the gun’ for future water ingress claims.

Dust Continues to Settle on the Owners Corporation Act Reforms

strata, Strata Law, Strata Lawyers, Owners Corporations

Hurrah, we are able to leave our apartments at last, and go out and have some fun. But seriously, Consumer Affairs Victoria, you all should perhaps stay inside and complete your work.

It is truly astounding that the Owners Corporation Amendment Bill 2019 still has not been enacted.

It sailed through the Lower House Legislative Assembly, and got as far as the Second Reading speech in the Upper House Legislative Council on 20 February 2020 via Adem Somyurek, and there it has been stuck in limbo ever since.

Remember, some of these reforms were ready to be enacted as far back as 2014, and the Bill was substantially complete at the end of 2016.

With the number of persons living in strata in Melbourne now over the 1 million mark, and with the value of strata buildings in Australia worth in the trillions of dollars, there is a great need for robust, up to-date legislation that takes account of the complexities and frustrations of living and working in a strata titled building.

However, the Consumer Affairs Victoria web page (updated on 22 May 2020) still says that “the Bill should be introduced into Parliament later in 2019.”

There are many key reforms that the Owners Corporation has desperately needed to be introduced within the last four years in particular. Countless harms are being transacted upon the community, while parliament and Consumer Affairs Victoria dithers.

Reforms such as: introducing stricter regulatory reporting requirements for Owners Corporations with over 50 lots, prohibiting a developer from selling lots in a building where the budget for the annual fees is obviously wrong, permitting an Owners Corporation to bring legal proceedings against wrongdoers without needing to passing a special resolution, enshrining the ‘benefit’ principle for extraordinary fees where only one or some lot owners will benefit from work that needs to be done to common property, prohibiting an Owners Corporation manager from having a contract greater than 3 years, requiring a developer to disclose all relationships with any service providers that they appoint before they register an Owners Corporation, a restriction on how many proxies a person may hold at a general meeting.

The list goes on.

These are important reforms. The reforms will allow Victoria to ‘catch up’ with the strata laws in other states and territories, and it will also allow Victoria to keep up with community expectations.

The longer the government continues to drag its feet, the more that the community will start to think that something more sinister is at play. Why delay reforms that will only benefit owners of apartments, unless there is money to be made by those that build those apartments?

My request to the newly-minted Minister of Consumer Affairs? Nip down to Parliament next sitting with a memo to request this legislation gets passed pronto…

The Future of Apartment Living - Post Covid-19

Strata Law, Strata Lawyer, By-laws, Owners Corporation

We’ve all spent far too much time over the winter months holed up in our apartments working at home, educating at home and living at home.

Home has become our lives, and perhaps not for the better. And so as spring thaws on our winter of discontent, and as restrictions ease somewhat, it is perhaps time to re-think what we need from our apartments and our common areas and facilities, and from the service we get from our facilities managers.

At the very top of the list for the Committees of Owners Corporation has got to be some serious budgetary reform. Without exception, every single service contract has to be renegotiated in order to deliver value for money.

Having acted for Owners Corporations for over 10 years all around Australia, I have said it before and I'll say it again, Victoria is by far the worst state for overinflated service contracts. I have never seen such largesse in any other state or territory. 5 year OC Manager contracts, 10 year cleaning contracts, 20 year embedded network agreements, 25 year caretaker agreements. The list goes on. No other state or territory permits this. Of course, the fault lies with Consumer Affairs for failing to regulate this. They have known about the issue for many years, and have done nothing to bring about reform.

Be that as it may, it is now up to Owners Corporations to investigate all possible options to escape these contracts. Most will be completely unenforceable, and many more will have been void ab initio. Owners Corporations could begin to take charge of their finances and repair the great holes in their budgets, only once they have renegotiated these contracts.

The next step for Owners Corporation Committees is to think creatively. It appears that a very high number of Owners Corporations have deferred their remedial works, painting, and internal upgrades contracts indefinitely, in order to undertake budget reform. While this seems sensible and practical for most buildings, some buildings could actually take the opportunity of the very-quiet economic conditions and could decide to undertake their planned projects (or bring them forward) if they can negotiate very good deals with contractors (who will no doubt be desperate for the work).

Now could also be the time to discuss with your contractors about a re-deployment of services. Perhaps less hours from security or the concierge is required, and the cleaning contractors can be re-deployed to provide more hours to dedicate to extra cleaning.

There may even be some possibilities for the rooftop and unused facades to be used for signage and telecommunications antennae to derive extra income for the building.

Of course, there are only limited opportunities for a building to make costs savings. The fixed costs are sometimes too difficult to move. But if you don’t try, you’ll never know.

NSW Finally Get Laws to Restrict Short-Term Letting

AirBNB, Short-Term Letting, Strata Law, strata, Strata Lawyer

The NSW State Government has finally gazetted the new Section 137A Strata Schemes Management Act to commence on Good Friday (April 10, 2020).

The new Section 137A permits an Owners Corporation to pass by special resolution, a By-Law to prohibit a lot from being used for short-term rental accommodation if the lot is not the principal place of residence for the person that normally resides there.
Under the definitions section, the fine print further explains that the threshold for ‘short-term letting’ is any duration for less than 90 days.

There is conjecture over the term ‘principal place of residence’ and there is sure to be some case law to come out of this, between owners and Owners Corporations. The NSW State Government has seen fit to not include a definition of this term, which is problematic.
To resolve this, we take the view of adopting the definition of ‘principal place of residence’ as used by the Australian Tax Office (ATO) which will provide Owners Corporations with a great measure of comfort as it provides an objective set of criteria for establishing a checklist for ‘principal place of residence.’

So, to give some hypothetical scenarios:
Example A – Jenny owns an apartment in Crows Nest and resides there full time. She decides to travel to Europe and the UK for 8 weeks in July and August, and lets her unit on AirBnB while she is away in order to earn some income and to offset her holiday expenses. Under the new Section 137A Strata Schemes Management Act 2015, Jenny will be able to do this lawfully, and her Owners Corporation will be unable to enforce any By-Law which restricts short-term letting, as this apartment is Jenny’s principal place of residence.
Example B – Garth owns an investment unit in Bondi Junction through his self-managed Superannuation fund. His tenants have been paying $700 per week, but decide to move out. Garth decides to list the apartment for short-term stays at the rate of $225 per night to see if he can get a higher rental yield and a better return on his superannuation. Garth will be in breach of Section 137A Strata Schemes Management Act 2015 if the Owners Corporation has passed a By-Law to restrict short-term letting. Even if Garth has not yet had any guests stay in the apartment, he will still be in breach even just for advertising the property on a short-term platform.
With the Covid-19 Pandemic in full swing, prudent Owners Corporations will move quickly to adopt and register a compliant Short-Term Letting By-Law to ensure that only long-term residents can access the common property and the apartments in an effort to reduce the risks of community transmission and infection.

Strata Title Lawyers has a comprehensive Short-Term Letting By-Law ready to be purchased for a fixed fee of $300 + GST. Order your By-Law today (with motion and explanatory note) by emailing or by telephone 02 9091 8068.

VCAT Rules that OC Manager’s Actions to Pay Itself a Termination Payment Was Unlawful

Strata Law, Strata Lawyers, Victoria Strata Law

In an order published by VCAT at the end of 2019, Your Body Corporate Pty Ltd (YBC) and its Directors, were ordered to repay the sum of $192,465 plus interest for fees it unlawfully deducted from an Owners Corporation’s account upon termination as OC Manager.

The proceedings concerned an Owners Corporation located at Wyndham Harbour, a community of over 800 residential lots.

YBC was appointed as OC Manager to take over from a previous manager for an initial period of 12 months. Its appointment was renewed for a further two years.

However, during the period of YBC’s management, it became apparent to owners that there were problems with YBC’s handling of the accounts and records and administration of the development. An independent auditor’s report confirmed that the accounts could not be verified and that the financial reports did not represent a true and fair view of the financial position of the Owners Corporation.

When it became apparent to YBC that it would be terminated at an upcoming Special General Meeting, and that an overwhelming number of votes would support its termination, YBC prepared an invoice for the sum of $192,465 representing the balance of its management fees and future disbursements. Because it still operated the Owners Corporation’s trust account, the Manager made the decision to immediately pay itself that sum from the Owners Corporation’s maintenance fund.

It did not inform the Owners Corporation of the invoice, nor did it disclose that it had transferred the funds. It did not have the approval of the Owners Corporation to make this payment to itself.

In addition, at the time YBC made the payment to itself, the Owners Corporation had not yet given a notice to terminate the Management Agreement.

It can also be revealed that YBC then transferred the $192,465 payment from its business account to its directors one week later.

Three weeks later, YBC advised the Owners Corporation that it could collect its accounts and records from its office and that it had ceased to provide services to the Owners Corporation. This was strange because the Owners Corporation still had not terminated the Agreement.

Nevertheless, the Secretary collected the books and records and funds from the Manager’s office. The payment of the $192,465 by YBC to YBC was not contained within the financial records provided to the Owners Corporation. YBC maintained in the VCAT position this was an “oversight.”

Two months after the transfer to itself, YBC applied to be de-registered as a company.

YBC returned total funds of $325,423 to the Owners Corporation. This represented a $500,000 loss of Owners Corporation funds in a two year period.

VCAT found that the Manager was in breach of its statutory and contractual duties to act honestly and in good faith with due care and diligence.

VCAT also found there was a gross failure to maintain proper financial records and to manage the financial affairs of the Owners Corporation.

The payment by YBC to itself was all the more egregious because it was from the Maintenance Fund, which is a protected trust fund for the benefit of the owners for the capital repairs to common property.

VCAT also found that the removal of the Owners Corporation’s funds were without any legal entitlement authority or consent was unconscionable conduct under the Australian Consumer Law, and found that the Owners Corporation were permitted to join the directors of YBC to the proceeding in their personal capacity for their role in participating in the unconscionable conduct.

This decision should act as a precedent to stop any other Manager from deducting or paying itself fees upon termination of the contact. Even if there is a clause in the agency agreement which permits the payment, it is likely that such a clause is invalid and in breach of the Australian Consumer Law.

OC Managers all across Victoria should familiarise themselves with this decision.

Red Tape and Further Delays to Owners Corporation Act amendments

Strata Law, Strata Lawyer, Owners Corporation Act, OC Act, Victoria Strata

In December 2013, Consumer Affairs Victoria completed its review into a more robust licensing and certification system for the training and conduct of Owners Corporation managers.

It proposed to amend the Owners Corporation Act to ensure that OC Managers could not be appointed for longer than 3 years, and had a duty to disclose to the Owners Corporation any beneficial relationship with the Developer that appointed them. It also proposed to strengthen the registration scheme to ensure that persons convicted of certain criminal offences such as fraud offences could not become registered as Owners Corporation Managers.

It also provided that the contract for appointment of OC Managers could not include certain unfair terms which made it difficult for the OC to revoke the appointment of OC Managers.

In addition, it was recommended that clauses be introduced to expressly provide for the OC Manager to be required to act in the best interests of lot owners (a fiduciary duty) in relation to the procurement of service contracts and other goods and services, and not to accept kickbacks from contractors or otherwise take a commission.

None of this sounds controversial, pretty simple stuff really.

Except for the fact that it was mothballed quietly, and the Bill never made it to Parliament. Then, 18 months later in August 2015, Consumer Affairs announced that it was going to review the entire Owners Corporation Act. It was expected that the 2013 Review and the 2015 Review would be bundled into the same legislation.

Now that made sense at the time, too. Parliament may as well pass it all at once.

And by the end of November 2016, the Consumer Affairs Victoria review into the entire Owners Corporation Act had been completed. A Bill was drafted and sent off to the Ministers’ Office to be tabled in Parliament.

Instead, there it sat for a further two and a half years, until finally introduced into the Lower House Assembly in September 2019. Now, the Bill is adjourned for further debate, to be discussed at some stage again later this year.

The sad thing about this is that the amendments to the Owners Corporation Act in relation to OC Managers were all ready to go over 6 years ago. If they had been introduced as promised, I can only imagine that the Industry would have been cleaned up by now. All of the ‘cowboy’ OC Managers would have been run out of town, barred from practice due to past crimes, or unable to get insurance due to poor business practice.

The OC Manager contracts of 5 years and 10 years’ duration would have been a thing of the past, and Owners Corporations would have been in a position to terminate early, access an open market to source proper professionals to act as their OC Managers, and obtain better service and value for money.

And of course, all of those allegations of pork barrelling by OC Managers appointing companies for service contracts in return for commissions might have been stamped out.

Of course, Consumer Affairs Victoria can move quickly when it wants to. The reforms to legitimise and enshrine Air BNB and other short-term accommodation agencies by amending the Owners Corporation Act was pushed through the Parliament in just two years, and it would have been one year if not for lobbying by We Live Here to trigger an Upper House Inquiry.

The cost of inaction is galling. Frankly, the owners of apartments in Melbourne deserve better from Consumer Affairs.

New Owners Corporation Bill reads like a ‘favour for mates’

strata, Strata Law, Strata Lawyer, Owners Corporation, Building Defects

Strangely absent from the new Bill that was introduced into Parliament in the middle of September was a raft of consumer protections that would have prevented builders and developers from running roughshod and trampling over the legal rights of owners settling on new apartments.

For starters, the Labour government has ignored submissions from advocacy groups such as Strata Community Australia and ‘We Live Here’ to reduce the threshold for commencing legal proceedings from a special resolution to an ordinary resolution (like in NSW and Queensland and other states). Instead, they have reduced the threshold to an ordinary resolution, but only if the legal proceedings are within the civil jurisdictional limit of the Magistrates Court ($150,000 or less). So, if an Owners Corporation is faced with a serious management dispute, or a building defects claim, or an issue with the safety of the cladding, then the Owners Corporation has no choice but to try and pass a special resolution (which of course are notoriously difficult, if not impossible to achieve).

Nowhere else in Australia imposes such a large obstacle to Owners Corporations for seeking legal redress. It acts as a barrier to justice and is an affront to civil liberties. Despite clear submissions and case studies being put to Consumer Affairs to the Minister, these pleas have been ignored. One can only conclude this is due to the need for this Government to cosy up to Developers and Builders.

Its’ interesting also, to see that a clause has been entered into the Bill that would have the effect of preventing a Developer from signing the Owners Corporation up to a contract for more than 3 years into duration.

Hooray, I might hear you say. That means those crooked 10 year embedded electricity contracts will become a thing of the past. The same as those 10 year cleaning contracts, or those 25 year caretaker contracts, or those 10 year ESM contracts or those 99 year serviced apartment / letting agreements.

Well, no. The exact wording of the clause requires that the developer is prevented from entering into these types of agreement, only if it “benefits” them.

Now, I’m not exactly sure how an Owners Corporation is supposed to easily obtain evidence about this. If there is a commission payment or a kickback paid to the Developer, there is hardly going to be a clause in the official contract about this. Nor will there be a proper disclosure or receipt being made. What if the payment is made to a related company of the developer? Or to the developer’s wife or son? A family trust? A cash payment via an intermediary? A donation on behalf to a charity or school? Works in kind?

Hmmmmm. It seems this new clause is not going to stop Developers and their mates from signing up to these crooked contracts at all.

Again, clear and cogent evidence and case studies were put before the Consumer Affairs Minister and her Department about the need to just put a long-stop on these agreements altogether. Make them 3 or 5 years maximum, that’s it.

However, the decision by the Government to ignore this recommendation means that it must have been done deliberately. One needs to ask Parliamentarians the question – what good defensible reason is there for a developer to sign up an Owners Corporation to a contractor of their choice to a binding contract for between 10 – 50 years? How is such a contract in the public interest?

The answer. It’s not. It’s only in the developer’s interest, and the contractor’s interest.

So much for this Consumer Property Law Review being about the owners and residents in High-Rise buildings. It seems the Review was more about ticking the box and further entrenching the rights of the rich and the powerful.

A great shame, and a great waste of time for all involved.

Hats off to you, Premier, but remember, we’ll all be watching…

cladding, strata, Strata Law, Owners Corporation, Combustible Cladding, Rectification, Building Defects

Credit where credit’s due, I say. Victorian Premier Daniel Andrews deserves the plaudits this month for Labor’s stunning announcement that it will pursue dodgy building practitioners on behalf of owners of apartments covered in combustible cladding.

One of the key features of the Building Amendment (Cladding Rectification Bill) 2019 which was introduced into Parliament on 15 October 2019 was the inclusion of a clause to allow owners to subrogate their rights to the State of Victoria so that it could chase builders, surveyors, engineers and other wrongdoers where the State pays for the rectification costs.

Any financial returns from the Court action will be reinvested into the cladding rectification programme.

The Premier also announced that it would top up the Cladding Rectification fund by chipping in the extra $300 million that the Commonwealth Government failed to contribute (by way of charging higher construction levies on builders and developers).

This column had criticised the Premier heavily just two months ago, when it revealed that the announcement of a $600 million Cladding Rectification fund was actually only half that amount.

More criticism was put on the Premier in last months column as well, when the announcement of the new Owners Corporation legislation failed to push through legislative reform to make it easier for Owners Corporations to sue builders, developers, engineers and surveyors by removing the barrier of having to pass a special resolution.

Indeed, in one fell swoop, the Premier has resolved both of my criticisms through the new Bill introduced into Parliament. Now I’m sure the Premier has better things to do than read my monthly column, but I am very glad that the State Government has committed wholeheartedly to this issue by announcing an Australian-first.

We shall wait and see whether other States and Territories around Australia will now follow suit.

However, my cynical nature sometimes gets the better of me, because I’m now starting to wonder how likely it will actually be that the State Government will actually prosecute these builders, developers, engineers and building surveyors. Perhaps the State Government might chase one or two egregious cases, just to send a message to the industry, but journalists will need to be reminded to check the data over the coming years to see whether the State Government’s appetite for litigation does actually eventuate.

Litigation is a risky business by its nature, and is there no such thing as a sure outcome. It might be the case that the expenditure of taxpayers money to chase builders and developers might just be too uncertain to warrant committing to. There will need to be robust oversight and project management over the prosecutions being commenced to recover these funds, as well as increased oversight on political donations from certain donors related to builders, developers, surveyors and engineers.

10-year Caretakers Agreements, joint owners’ voting rights put under the microscope by VCAT

strata, Strata Law, Strata Lawyers, Owners Corporation

There is a very interesting proceeding winding its way through VCAT presently, and once determined, it will no doubt have seismic consequences throughout Victoria for Owners Corporations and their relationships with Caretakers, Building Managers and Concierges.

The proceeding involves two Owners Corporations in the same large development in Mount Alexander Road, Travancore, alleging that agreements to appoint a building manager entered into by the developer (initial owner) -  Bensons Property Group at the Inaugural AGM, are invalid.

The Owners Corporations claim that the terms and conditions of the contracts were most disadvantageous to owners. Principally, that a 10 year duration of the contracts are excessive, and that the fees and charges payable to the building manager under the contracts are also excessive.

The Owners Corporation allege that Bensons Property Group breached their duties under the Owners Corporation Act to act honestly and in good faith with due care, skill and diligence in the Owners Corporations’ interests, and acted in breach of fiduciary duties owed to the Owners Corporation and all original owners.

It is indeed very common for developers to act on behalf of Owners Corporation to enter into service contracts on non-competitive terms and bind the Owners Corporation to potentially long-term inequitable arrangements. And not just for building management services. Bulk electricity, gas and hot water service contracts, as well as essential services and fire service maintenance contracts are all now under the microscope with this proceeding.

Some bulk electricity agreements that I have seen from clients can run for terms of up to 25 years, and the longest Caretaker contract I have come across sought to bind an Owners Corporation for up to 55 years to the Caretaker.

In a interlocutory decision recently handed down by Senior Member Vassie, Bensons Property Group had its application for summary dismissal of the proceeding dismissed, meaning the matter may now proceed to a final hearing.

Bensons Property attempted to have the proceeding dismissed on the basis that the two Owners Corporations were unable to pass interim special resolutions to bring the claim in VCAT.

In Victoria, an Owners Corporation must pass a special resolution (or interim special resolution) in order to bring a legal proceeding in the OC’s name.

In this case, the Owners Corporations passed the interim special resolutions by ballot. The Chairperson nominated himself as the returning officer to count the ballot forms and to declare the outcome of the ballots. Interestingly, by doing so, the decisions made by him as Chairperson are only amenable to challenge if (i) a decision was made in bad faith, or (ii) the Chairperson made an error of law by reaching a decision that was so unreasonable no other Chairperson could reach.

In this instance, there were multiple ballot forms filled out by owners where only one of the co-owners of the lot signed the ballots. However, the Chairperson declared the votes as valid, and counted them towards the final outcome of the special resolution.

Bensons Property contended that if these votes were invalid, then the interim special resolutions did not pass and the proceeding against them could be dismissed.

In ruling against Bensons Property, VCAT backed the Chairpersons’ declaration, finding that “there is no provision in the Act about how a vote for a co-owned lot is to be treated, other than section 90 [which directs that joint owners of a lot have only one vote between them]”.

VCAT found that “there is no general principle that a document signed in respect of a co-owned lot must be signed by all owners in order to be effective.”

While it is always best practice for joint owners to sign a ballot form or proxy form, this case shows that a ballot or proxy will not be invalid even if signed by only one owner, unless the Chairperson declares it so.



State Governments should refund stamp duty to those affected by flammable cladding

Combustible Cladding, strata, Strata Law, Strata Lawyers, Owners Corporation, Building Defects

Barely a fortnight passes these days without word that another residential building with dangerous cladding is evacuated. If we aren’t already at a crisis point, we are definitely approaching one.

Of course, people are right to ask, how did it get to this stage? How could the relevant authorities turn such a blind eye to these compliance issues for so many years?

As a lawyer acting for Owners Corporations, my response is, unfortunately, that I’ve known for years. The best part of a decade I’d say. I’ve acted for dozens of buildings with these types of issues. Sure, they haven’t been as bad as the ones that are now getting evacuated. Those buildings were 10 / 10 in terms of the threat to life safety. The ones I’ve been dealing with are further down the spectrum, perhaps a 6 / 10.

But of course, confidential settlements and deeds prevented my clients and I from going public. And so, the band played on. Nothing changed. Builders and developers continued to build sub-standard buildings. State Governments continued to keep ‘red tape’ and ‘bureaucracy’ away from the process, all in order to boost the coffers with swollen stamp duty proceeds.

However, by keeping away ‘red tape’ and ‘bureaucracy’ (which are interchangeable terms for ‘compliance’ and ‘adherence to relevant standards and the BCA) State Governments have created this vacuum and are now squarely responsible for creating and perpetuating this mess.

The announcement of a Cladding Fund of $600 million for affected buildings in Victoria is a welcome first step towards rectifying the issue. Of course, others have already reported that this fund is actually only allocated $150 million in total for affected buildings (as the Commonwealth Government has declined to put in $300 million, and $150 million is already allocated to fixing public buildings affected by the flammable cladding). It is speculated that only the worst-affected buildings will be rectified by the Victorian State Government, and with some reports that the true cost of remedying the cladding issues on the 1,000 affected buildings expected to cost at least $1 billion in Victoria, then it is clear that not all owners will be compensated by the Cladding Fund.

The stamp duty issue is an interesting one. Consider this: stamp duty was introduced as a means of defraying State Governments’ administrative costs of transferring a Certificate of Title from one party to another, and to ensure that the property records were properly held. In the modern era of course, this doesn’t actually hold true, as there is no possible way that it costs a State Government $30,000 - $50,000 to transfer a Certificate of Title. In fact, you pay extra for that anyway in the administrative fees charged by the relevant authorities and the mortgagors.

And of course, in NSW, the State Government sold off its Land Titles Office two years ago to private interests, so stamp duty really shouldn’t be charged anymore at all in NSW.

So, my argument is simple. The respective State Government ought to clearly and succinctly articulate why it should keep an affected owners’ stamp duty payment when it has actively removed most of the consumer protections that were in place in developing and constructing a residential building? It should answer the question as to why it failed to properly administer and enforce building regulations and standards, and failed for over a decade to properly fund and resource the relevant watchdog?

We won’t hold our breath for an answer.

Tom Bacon

September 2019


NCAT Changes Procedure for Strata Applications

NCAT, strata, Strata Law, Lawyer, Owners Corporation

NCAT has changed its requirements for an Owners Corporation in lodging any application for Orders under its Strata Community Schemes division.

The key changes are as follows:

  • When lodging an application, an owners corporation must provide evidence that the application has first been authorised by a meeting of the strata committee or a meeting of the owners corporation. If this is not provided at time of lodgement, the application will be rejected;
  • If all lot owners are affected by the orders that are sought, the owners corporation will need to notify all lot owners about the application and any affected lot owners will be given an opportunity to be joined as a party to the application.

Strata Managers will need to be organised to ensure that meeting minutes are provided prior to lodgement.

In addition, Owners Corporations will need to be aware that it might be required to post copies of the application to all owners (or send by email if owners have nominated an email address) and will need to be budget for those increased administrative and postal costs.


Case Update - NCAT rules that smoking is a nuisance, orders injunction despite no By-Law on smoking restrictions

strata, Smoking, Strata Law, Strata Lawyers

Gisks v The Owners – Strata Plan No 6743; The Owners – Strata Plan No 6743 v Gisks [2019] NSWCATCD 44:

On 28 May 2019, NCAT made orders that an owner in a Strata Scheme, be prohibited from smoking on the balcony or in the bedrooms of his lot and to close all exterior doors and specific windows, when smoking in his lot.

In this case the Tribunal found that: 

  1. Despite the fact that there was no by-law existed prohibiting the drifting of smoke, the OC was still permitted to seek orders to restrain smoking in order to properly ‘administer the Scheme’; 
  2. the smoking of cigarettes and smoke drift constituted a health hazard for the other residents that breathe it; and 
  3. The Tribunal made a finding of fact that the Owner was creating a nuisance, and therefore found a breach of section 153 of the SSMA 2015.

The decision stands for:

  1. the ability of NCAT to make broad orders under section 241 of the SSMA 2015 to rectify a nuisance created by an owner in breach of section 153 of the SSMA 2015;
  2. the Owners Corporation's broad duty to take steps to abate the nuisance for prohibiting the drifting of smoke, even if the Scheme did not have such a by-law; and
  3. the NCAT's orders ability to make "restrictive injunctions" against the owner of the lot dictating how they use their lot.

Either confess the OC’s sins to the insurer, or risk the policy being rendered as ‘junk insurance’

Lawyer, Strata Lawyers, Building Defects, Owners Corporation

Of all the issues being raised in the public eye following the evacuation of Mascot Towers in Sydney due to structural engineering concerns, one issue in particular is troubling me greatly.

The Owners Corporation held a policy of insurance for alternative accommodation to be paid out should there be such an event that triggered the claim. However, the insurer denied the claim on the basis that the Owners Corporation hadn’t disclosed the full extent of the structural engineering concerns to the insurer when the policy was renewed.

Given that there are 122 apartments in the block (at a cost of $150 per night for alternative accommodation) the insurer is saving itself nearly $20,000 per day (and over $800,000 at the time of publishing this article).

Because of the insurer’s stance, the NSW State Government has made the extraordinary step of offering an interest free loan to the residents to cover their alternative accommodation, but there is no guarantee this will be provided to any other building should this happen in the future.

What will rankle with each and every owner and resident in the building is that they have paid a high sum of money for their insurance premium, but because of the insurer’s stance, they have been left high and dry and without insurance coverage at this very important time.

And in Melbourne, another residential high-rise building overlooking Spencer Street station was evacuated two weeks ago due to an issue that short-circuited the building’s power and heating. There is no word yet as to whether the insurer is going to accept that particular claim for the resident’s alternative accommodation costs, as this particular claim is still being researched by the insurer.

Elsewhere, in Cannonvale, Queensland, an Owners Corporation suffered extensive damage as a result of Tropical Cyclone ‘Debbie’ in March 2017. The insurer had, only a few days before the cyclone, issued a Residential Strata Insurance policy, as it had been up for renewal.

After the cyclone damage and after the claim had been notified, it became apparent when the insurer searched records that there may have been pre-existing defects in the building to the common property eaves and soffits and to the trusses and tie downs of the building. The insurer claimed that the non-disclosure of these defects by the Owners Corporation at the time of renewal means that the insurer could reduce its liability to ‘$nil’ based on non-disclosure and misrepresentation. This matter is now being determined in the Federal Court, to test whether insurers can reduce their liability to $nil if an Owners Corporation has not disclosed material facts and circumstances about their building, pursuant to Section 28 of the Insurance Contracts Act 1984, or whether an insurer is obliged to nevertheless process the remainder of the claim, and reduce the total by a certain percentage or formula.

There is an emerging pattern of evidence that is suggesting that insurers are seeking to decline major insurance claims on the grounds of non-disclosure of matters that might heighten the building’s risk.

In my view, Committees need to ensure that when the Strata Manager is renewing insurance, it should insist on a meeting with the broker, OC Manager and Committee (and take notes at that meeting) so that each and every relevant matter can be disclosed to the broker. If there is not clear evidence of this process, there is every chance that in the event of a major claim, the building might not get its claim approved.

The practice of many Strata Managers is for the broker and the Manager to simply ‘arrange’ for insurance between themselves. Often, the entire arrangement is simply done by exchange of email or over telephone. In my view, this practice needs to cease. At the moment, insurers get to have it both ways, by acting ‘casual’ when it comes to arranging insurance renewals, but then act formally and forensically when it comes to processing the claims that arise.

Under the standard SCA agency agreement, Strata managers might be potentially indemnified by the Owners Corporation if they don’t manage this process properly, however the indemnity clause has not been tested and there are exceptions if there is negligence involved.

In this environment, if an Owners Corporation was denied an alternative accommodation claim on the basis of non-disclosure of defects, it is quite possible the Owners Corporation could decide to sue the strata manager and test this clause out. In my view, Strata Managers need to tighten up the disclosure process with brokers and involve the Committees more in order to avoid the possibility of being sued.


Owners Corporation Chairperson awarded $120k defamation payout over email from tenant

defamation, strata defamation, Strata Law, Strata Lawyer

A Court in Sydney has awarded damages of $120,000 to the elderly chairperson of a Manly apartment block, after a female tenant sent an email to him and the other owners in which she asked him to stop emailing her about locking her mailbox.

The Court heard the Chairperson had sent  a number of emails to the tenant noting that her mailbox in the building had been left open and requesting that she keep it locked.

This included an email on May 24, 2017, in which he said: "As your mailbox has again been open for the last few days it is obvious I have not been able to convince you of the seriousness of this issue."

The court heard there had been reports of gangs stealing mail in the area. Mailboxes in the building were broken into twice, starting in April 2017.

The Chairperson believed the culprits may have been able to cut a "master key" by examining the lock on the tenant’s unlocked mailbox.

In her email on May 25, the tenant said: "Your assertion/s that a single unlocked mailbox has allowed a criminal milieu to stalk the ... [apartment complex], and spend the time necessary to copy barrels/locks in order to then construct a master key is farfetched [sic]."

She described the Chairperson as having a "fixation on this issue" and suggested that, in light of his "email hobby", he might consider getting sensitive documents such as banking statements sent via email rather than in the post.

Lawyers for the Chairperson said the email defamed him by implying he was a "small-minded busybody who wastes the time of fellow residents on petty items" concerning the building, and that he "unreasonably harassed" and "acted menacingly towards" Ms Murray by "consistently threatening her by email".

They also alleged the email from the tenant suggested the Chairperson was a "malicious person who sent threatening emails to the defendant and copied in other residents" to publicly humiliate her.

The Judge found those meanings were conveyed and the tenant had failed to establish a defence to any of them. This included defences of truth and honest opinion.

"It would be fair to say that every sentence of the defendant’s email in reply struck a blow at the plaintiff, and was intended to ridicule and humiliate him in every way," the Judge said.

She found that the tenant’s evidence was "coloured by exaggerated language, groundless suspicions and hostility".

As a lawyer that practices in Owners Corporation matters, I am not shocked by this decision, even though the facts of the matter may seem trivial.

Defamation law is complicated and convoluted, however it is best practice that one should avoid ever having to get mixed up in a defamation case.

Owners and Committees and strata managers should reflect on this judgement. I have seen many emails over the years that have been sent by Owners to Committee Members and vice versa that are far worse in language and imputation.

It will only be a matter of time before a similar judgment is made in respect of another owners corporation.

My advice: best to go to bed and see how you feel in the morning before sending that email to the Committee at 9:30pm at night. Calmer heads and more carefully chosen words seem to prevail in these circumstances...


Storm Warning for strata managers - insurers may look to decline more claims

strata, Strata Law, Strata Lawyer, strata insurance, insurance

There has been zero publicity to date about a very important case that is currently before the Federal Court.

If the result of this case goes in the insurer’s favour, then it will send a shockwave through the strata management industry in Australia.

The facts are relatively simple:

An Owners Corporation in Cannonvale, Queensland suffered extensive damage as a result of Tropical Cyclone ‘Debbie’ in March 2017.

Strata Community Insurance (SCI) had, only a few days before the Cyclone, issued a Residential Strata Insurance policy, as it had been up for renewal.

After the damage and after the claim had been notified, it became apparent when the insurer searched records that there may have been pre-existing defects in the building to the common property eaves and soffits and to the trusses and tie downs of the building.

The insurer claimed that the non-disclosure of these defects by the Owners Corporation at the time of renewal means that the insurer could reduce its liability to ‘$nil’ based on non-disclosure and misrepresentation. The insurer then put a certain lower offer to the Owners Corporation to accept.

The Owners Corporation refused to accept the offer put by the insurer, and has now challenged the insurer’s decision to decline the major part of the cyclone damage claim.

The Hearing will be heard in the coming months.

At the heart of the Hearing will be the central issue as to whether insurers can reduce their liability to $nil if an Owners Corporation has not disclosed material facts and circumstances about their building, pursuant to Section 28 of the Insurance Contracts Act 1984, or whether an insurer is obliged to nevertheless process the remainder of the claim, and reduce the total by a certain percentage or formula.

In the context of insurers increasing their premiums dramatically for buildings where there are major defects (such as ACP cladding) this case will be very important for the entire industry.

Our firm is aware of a new trend in insurance claims processes whereby the insurers are relying on these ‘minor’ non-disclosures as method or tool for asserting their liability be reduced to $nil. The insurers’ tactics then appear to be to issue a very low offer to owners to accept the claim and to sign a release.

If the Owners Corporation is unsuccessful in the current proceeding, I expect this insurance claims process to become more and more widespread.

As for strata managers, extra care and time needs to be taken when answering the disclosure questions from the brokers upon renewal time. If need be, strata managers should take advice from a lawyer as to whether certain issues about the common property need to be disclosed, and if so, how best to do it.

A failure to manage this process properly, could lead to a claim by a disentitled Owners Corporation against the strata manager and its PI insurance policy.

It’s an insurance merry go-round at the moment. As the property market tightens, and as the global economy contracts, we expect insurers shall flex their muscles to decline more and more claims across all industries: property, motor, marine and the like.

[Delor Vue Apartments CTS 39788 v Allianz Australia Insurance Ltd [2019] FCA 639]



New ‘Draft’ Owners Corporation Legislation Still Protects Builders and Developers, Shuts Out Owners

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

On its website, Consumer Affairs Victoria has released a copy of the proposed amendments to be made to the Owners Corporation Act 2006. The ‘draft’ legislation is  available for comment from stakeholders until 10 May 2019. The state government proposes to introduce the new legislation later this Year.

Of particular note is the proposed reform to allow an Owners Corporation to file legal proceedings if an Ordinary Resolution (50.1% of lot entitlements) is passed at a Special General Meeting or at the AGM.

Under the current legislation, a Special Resolution (75% of lot entitlements) is required. It has proven to be virtually impossible under the current legislation for a medium to large sized Owners Corporation (above 50 lots) to be able to pass such a Special Resolution in the current legislative environment, owing to a combination of developer / builder proxies, and absent and overseas Asian investor owners.

Even an interim Special Resolution (where over 50%, but less than 75% of lot entitlements vote in favour of the motion) has proven impossible to procure due to overseas investors and language barriers.

I have acted for many large residential towers in the Metropolitan Melbourne area that are riddled with multi-million dollar building defect issues, but were unable to file a claim against the builder or developer because they were unable to garner the Special Resolution support.

Many stakeholders spoke out during the Consumer Affairs consultation process to bring forward their case studies about this breach of natural justice. And seemingly, Consumer Affairs listened to the feedback.

I was heartened initially when I read the press release  to see that the new ‘draft’ legislation sought to reform this important area of the law.

However, when you dig a little deeper into the detail, the truth of the matter is exposed. In fact, the reform to lower the barrier from a Special Resolution to an Ordinary Resolution is only activated if the subject matter in dispute is “within the civil jurisdictional limit of the Magistrates Court.” This limit is currently described as any matter worth less than the sum of $100,000.

So if an Owners Corporation sought to terminate an OC Managers Contract, or a Caretakers Contract, and if those Agreements had remaining value (including insurance commissions) in excess of $100,00, then it is back to square one of requiring a Special Resolution.

Indeed, if an Owners Corporation had a report detailing building defect issues on the common property, then most likely a Special Resolution is still required.

This keeping of the status quo only suits the Tier One Developers and Builders, and the Strata Management and Facilities Management sectors.

It appears once again that Consumer Affairs has tipped its hat to the top end of town, leaving Owners Corporations disadvantaged and with a serious barrier to justice to try to overcome.

Especially in light of the combustible cladding crisis that is currently gripping Victoria, and where hundreds of towers around Melbourne are finding they have had the incorrect cladding installed on their facades of the building, this proposed keeping of the status quo serves only to further protect the Building Surveyors, Engineers, Architects and indeed the government bodies that might otherwise be answerable to such claims.

It is worth noting this is not the case in other States and Territories. For example, in NSW, only an ordinary resolution is required to commence such legal proceedings, and only then, the voting % is made up of those who actually attend the Meeting (I,e, if the motion is passed by over 50% of those lot owners that actually turn up to the Meeting or send a proxy, then the motion is carried).

Consumer Affairs had an opportunity to bring Victoria into conformity with NSW on this hot topic. Instead, it botched it. Perhaps the interests of builders and developers in getting away with constructing defective buildings mattered more to the Government than allowing its citizens to have their day in Court. Tsk tsk. It appears the Government is still clueless about the strata sector, it seems only to care about how quickly and how high the towers can be built. Beyond that, they haven’t really thought about it at all. 

Boom, Boom, Bust and Out

Strata Lawyer, Owners Corporation, Defects, Lawyer, Tom Bacon

More builders and developers will choose to “go bust” instead of being held accountable to Owners Corporations for dodgy building defects

An Owners Corporation recently found out the hard way, when the builder it had taken to VCAT for building defects slipped into voluntary liquidation shortly before the Hearing commenced, leaving the Owners Corporation out of pocket and unable to chase any other wrongdoers in the matter.

In my view, this is a cautionary tale for consumers and investors of apartment buildings and the lessons ought to be heeded by other Owners Corporation otherwise the same thing could happen to them.

Ascot Constructions Pty Ltd [In Liq.] constructed a three-storey residential apartment building in 2011 at Caroline Springs. Soon after the occupancy of the brand-new building, complaints about defects including water leaks, blocked pipes and flammable cladding emerged. It took the Owners Corporation three years to bring proceedings against the builder for damages in respect to the defects and a further three years before the claim was finally set to be determined at a hearing in VCAT in late 2018.

The architect and building surveyor had also been joined to the claim but had ultimately acted to settle their share of the liability before the Hearing outside of the proceedings.  

The OC was left with approximately $2million in out of pocket costs, and the building company tipped itself into voluntary liquidation shortly before the commencement of the VCAT hearing. This meant that VCAT was left with no option but to strike out the Owners Corporation’s claim, leaving the OC with no way of recovering the outstanding costs from the builder.

Three key lessons can be taken away from this experience. OCs and owners that find themselves in a building defects dispute with a builder should:

  1. Act quickly to bring a claim against the liable parties. One of the problems in the case above, was simply the amount of time that it took for the OC to commence proceedings.
  2. Retain good building experts and engineers to provide the OC with accurate and timely reports that can be used as evidence in legal proceedings.
  3. Be open and flexible in negotiations and settlements because of the unavoidable danger of the respondents going into liquidation.

Ascot Constructions is not the only recent example that OCs have to learn from. Hickory (a large construction company) placed its subsidiary H Buildings Pty Limited into voluntary administration in late 2018, around the same time as 13 claims for the rectification of cladding and building defects were being made against it by various Owners Corporations in VCAT. It should be noted that Hickory say that its subsidiary was liquidated due to unrelated mounting legal costs in an unrelated case in Western Australia.

In the meantime, if a defect arises in your building be sure to use the small window of opportunity to bring a claim, do your due diligence on the ability of the builder and other concurrent wrongdoers to meet the costs of the claim, and remain open minded and practical when conducting negotiations and settlements.








The Issues in Sydney’s Opal Tower Should Serve as a Warning to Melbourne’s Building Industry

Strata Lawyer, Tom Bacon, Strata Law, Defects, Opal Tower

A downturn in consumer confidence about building standards is the last thing that developers and builders of residential apartment buildings need right now. However, the saga that is playing out in Sydney’s Opal Tower is serving as a warning shot to all owners and prospective buyers of apartments about the perfect storm that has been brewing in the construction industry for some time.

The bad news is that the deregulated building compliance laws and standards that led to these issues in NSW’s Opal Tower are almost identical to Victoria’s laws and standards in much the same respect, meaning that Melbourne may have an Opal Tower somewhere amongst it soon enough.

Structural cracks opened up on level 10 of the 392 unit tower in the Sydney suburb of Homebush on Christmas Eve, leading to the enforced evacuation which left residents without a home during the holiday period, and is causing more frustrations as some owners face up to another month of living in alternative accommodation before they find out if the Tower is safe to return to.

An interim engineering assessment report has highlighted that the some of the cracks in the pre-cast concrete panels may have deviated from the original design.

While the Opal Tower has garnered significant media attention because of the extensive damage that has occurred in an almost brand-new building, the sad reality is that this is just the tip of the iceberg of a much larger issue brought about by the continued de-regulation of the construction industry in both NSW and VIC.

The current fashion of the construction industry is for developers to enter into contracts with builders known as “Design and Construct” contracts (or “D & C’s”) for all or part of a building to be designed and built by the builder.

These contracts provide builders with free reign over both the design of the building and the types of materials used. The contracts usually also impose financial penalties on the builders if the project is delayed.

In addition, the introduction of private building certifiers and the removal of independent council inspections of buildings has meant that builders no longer have to answer to a strong independent inspector to enforce building standards and compliance. Some private certifiers will have a conflict of interest as they rely on being paid and selected by the developers and builders to certify their buildings.

On top of this a similar model of contractual relations between builders and sub-contractors (where contractors are given limited amount of time to complete large scale works) has created an environment where precision and safety have been replaced by cutting costs and lowering standards in order to meet deadlines and budgets. Thus, the perfect storm has arrived.

It remains to be seen what overhaul of policy and regulation emerges out of the Opal Tower issue, but without a commitment from Government to remove the conflicts of interests between private certifiers and builders, the quality of buildings may continue to plumb new depths.  The Victorian state government ought to take strong and decisive action here, as it has a big financial stake in keeping economic conditions ripe for both developers to continue building apartment buildings, and for citizens to continue to purchase apartments in those buildings. Needless to say, a strong construction industry creates jobs, keeps the unions happy, increases consumption of steel and building materials, and swells the public coffers with stamp duty payments. Therefore, Premier Andrews needs to jump on the front foot.

Current owners of high-rise apartments should seek guidance from their Owners Corporation Committees to commission reports detailing whether there are building defects, and whether there is still time to bring a claims against the builder and developer.

Alternatively, if you’re considering buying an apartment, then be sure that you have conducted your due diligence on the records of the Owners Corporation prior to making an unconditional offer. Better to be safe than sorry.

Taking the Plunge on Plumbing Defect Claims

Strata Lawyer, Strata Law, Owners Corporation Law

Victorian consumers of plumbing services might be surprised to learn that they are protected by the most comprehensive statutory protections in Australia.

The Victorian Building Authority requires that plumbers cannot be licensed to carry out any work unless they hold insurance coverage against defective plumbing work, trade practices liability, the non-completion of work as well as public liability insurance.

The General Insurance Order 2002 that applies to these matters (‘known as the Ministerial Order’) also provides full coverage for legal and expert costs incurred by a property owner in making a claim against a plumber.

Multiple occupancy dwellings such as apartment buildings can suffer from quite serious plumbing defects, ranging from pan siphoning and water pressure issues, to crushed pipes and installation of faulty metering, through to roof guttering and defective designs and / or installations of downpipes.

There is a strict time limit of six years to bring a claim under these warranty insurance provisions, and consideration and advice should be taken form a lawyer to ascertain the exact date as to when the policy coverage commenced.

One of the advantages of this warranty system over the other schemes in Australia is that the plumber does not have to be dead, disappeared, insolvent or not practicing anymore before any claim can be made against the insurance policy.

True enough, the insurer has rights to compel the plumber to rectify any defective plumbing work, but that doesn’t limit or stop the claim from being accepted if the plumber refuses to do so.

The interesting part about all this is that many of the insurers that offer these policies seek to limit their exposure by setting an upper limit of $50,000 per apartment or up to $5 million in total. However, the Ministerial Order makes it clear that any monetary limit on the indemnity is prohibited for loss or damage, error of design and the costs of inspecting and repairing the plumbing work.

The Building Act also confirms that the Ministerial Order trumps the terms of any insurance policy, to the extent of any inconsistency.

What this means is that consumers have access to an unlimited liability insurance policy for the rectification of defective plumbing work. 

But does all this sound too good to be true? Well, yes, yes it does. The insurers would certainly never have offered these insurance policies to plumbers in the first place if it thought they were exposed on an unlimited basis.?

However, there may be a reason why the Ministerial Order has never been challenged in an open Court or Tribunal decision, despite the Order being around for 20 years.  Insurance claims in these matters are mostly settled well before the proceedings are heard in Court. So it seems that insurers are reluctant to seek guidance from the Court about the application and interpretation of the Ministerial Guideline.

As always, Committees should ‘plumb to new depths’ by seeking advice from a lawyer on these matters, and should consider whether they might have a claim against a plumber for either faulty workmanship or design issues.

I would also recommend ‘fauceting the issue’ by engaging a properly qualified forensic plumbing consultant on these issues, as it tends to be a highly specialized field.

There is Something Rotten in the State of Victoria

strata, Strata Lawyer, Strata Law, Renewable Energy, Strata Community Energy

Renewable energy and climate change rank as two of the most important topics for voters at the upcoming State and Federal elections.

The Victorian Labour party came out of the blocks early, with a proposal for a $1 billion subsidy to install solar panels to 650,000 homes.

However, the Labour policy deliberately excludes apartment dwellers from access to the solar subsidy. Given that those who dwell in apartments make up nearly ¼ of the total population in Victoria, then the policy shall do nothing for them.

The Greens Party, to their credit, has sought to raise this issue with the government, and is seeking to build and extend the policy by making it apply to apartment dwellers also.

Policies and electioneering tactics aside, many owners of apartments are fed up with the Liberals and Labour parties not understanding how strata works, and what is involved in living in a vertical community.

Take the recent example of the Short-Term Letting Accommodation reforms, which in what could be only described as comedic scenes in Parliament as the Labour party proposed to pass the weak Bill, were roundly admonished by the Liberal Party in debate as the Bill was described by them as a “damp squib of a bill”. In a show of farce, the Liberal politicians could be seen scurrying from the debating chamber, so they were absent when a vote was taken, thus allowing the “damp squib” to pass.

Then there is saga of the long-awaited reform to the Owners Corporation Act. Some of the reforms in relation to Owners Corporation Manager contracts have been sitting on the shelf waiting to pass since early 2015.

The ‘new’ reforms for the Owners Corporation Act went out for consultation and feed back in 2016, and the new legislation was written and passed to Parliament over 12 months ago.

The great embarrassment is that these ‘new’ reforms for the Owners Corporation Act are already out of date, and out of lockstep with Court rulings and the way that technology is running. The earliest the reforms could pass is by perhaps June 2019. At that stage, they may as well announce a new review, and commence consultation on updating the legislation again, to take account of reforms and developments in the industry.

Both sides of Politics have shown complete disregard and a lack of familiarity and understanding of the complexities of apartment living. Until we see the Liberals and Labour showing a commitment and an understanding of the issues faced in our communities they simply don’t deserve the votes.

If I lived in the City electorate, I’d be voting Green, because at least the Party has a conscience, and has a commitment to understanding the complexities and the interests of apartment living.

That’s my five cents worth anyway, and for what its worth.

Owners Corporations Left With No Choice But to Fix ‘Dodgy’ Cladding Themselves, Following Government Review

Strata Law, strata, cladding, combustible, owners coporations

The Minister for Planning Richard Wynne, has announced new reforms to reduce the cost of removing dangerous combustible cladding from buildings, noted as “the first of its kind anywhere in the world.”

The reforms include amendments to the Local Government Act that will create what is called ‘Cladding Rectification Agreements’ (CRAs).

The CRAs will be between Owners Corporations and local councils – providing long term, low interest loans to pay for building work to rectify cladding.

Effectively, owners would be charged via their rates over a minimum period of 10 years, with costs transferred with the property if owners sell.

This arrangement was a key recommendation of the Victorian Cladding Taskforce (the VCT) established last year and chaired by former Premier Ted Ballieu.

What stinks to high heaven about all this? Well, for starters, its because the VCT was made up of stakeholders comprising Architects, building material suppliers, Real Estate Agents, Builders, Developers, Engineers and Building Surveyors.

Absent from the taskforce stakeholders’ table was the one group that perhaps needed to be represented the strongest – the poor old owners of the affected buildings themselves, Mr and Mrs Joe Public.

The closed recommendations of the VCT were always going to be skewed towards an outcome that recommended no fault to the actual wrongdoers that were responsible for installing the combustible cladding in the first place.

Because the VCT and the government have not put in place any stronger consumer law protection reforms to widen the ability of Owners to sue wrongdoers, the Owners Corporations themselves are now left to their own costs of fixing the issues with their buildings.

Over 100 building orders have been sent by the Victorian Building Authority to date, while it finalises its audit of all buildings in Melbourne.

A number of other significant recommendations came out of the interim report, including a proposed statutory duty of care on building practitioners, including architects and designers, in the residential strata sector. However to date, none of this has been implemented.

The Victorian Cladding Taskforce (VCT) released its interim report into highly combustible aluminium composite panels (ACP) and expanded polystyrene (EPS) on 1 December 2017. The products, which have been widely used since the 1990s, have been implicated in a number of blazes including the fires at Dockland’s Lacrosse building and London’s Grenfell tower that claimed the lives of 71 people.

The interim report made a number of key findings and recommendations to government, chief among them being the ban of ACP and EPS cladding on buildings of two or more storeys that are residential, health-care, assembly or aged care buildings, and buildings of three or more storeys that are office, shop or storage buildings. A number of other significant recommendations came out of the interim report, including a proposed statutory duty of care on building practitioners, including architects and designers, in the residential strata sector.

Melbourne, we need to talk about building defects…

strata title lawyers, Building Defects, Strata Law

Inevitably, there are going to be mistakes made in constructing and finishing a 20-storey tower. There are some fairly tricky building elements that contractors need to be very careful about in their methodology, otherwise some quite serious problems are going to manifest.

For instance, in order to prevent water ingress through a sliding door frame from a balcony into the interior of a unit, the waterproofing membrane and the screed that is applied to the slab must form a complete interlocking seal with the aluminum door frame. Any mistakes here, and water can travel through and under the door and into the unit. Similarly, the sealing of penetrations such as pvc and copper pipes from sinks and taps need to be appropriately fire sealed and fitted with a fire collar to prevent a fire from travelling between residential units on different floors of the building, and if the fire collar is not fitted properly or at all then it’s a huge safety risk and a breach of the Building Code of Australia.

In Sydney, over two thirds of apartment buildings built since 1997 have reported serious building defects (defined as defects quantified in excess of $500,000 to fix) according to a survey of 2000 buildings in research conducted by the University of New South Wales (UNSW).

Here in Melbourne though, we have no such data, and nobody seems willing to talk much about building defects in residential buildings. In Sydney, it’s quite the opposite. Legal proceedings are commonplace, and the developer or builder are enforced to return to site to complete the job properly, or pay for the works to be completed by other licensed tradespeople.

Now, the quality of contractors in Sydney is not too different to Melbourne. The same shortcuts are taken in both cities. On a construction site, time is money, and if some builders or developers can get away with cutting corners in order to save time, then that translates to a much cheaper build, and much higher profits for the developer, at the expense of the interests of subsequent owners, who may eventually have to pay special levies to fix the building if and when problems manifest.

The problem is so widespread in Sydney that builders and developers convinced the NSW State Government to stop Owners Corporations from filing legal claims against them. The resulting legislation now means that the developer puts up a 2% bond, and if any problems manifest within 15 months of the completion of the building then the bond can be called upon to fund repairs. Legal commentators have decried this reform, noting that defects within a building can sometimes take several years to become evident.

Here in Victoria, we have excellent legislation in this regard. A residential Owners Corporation has six years from completion of the work to bring a claim against a builder for shoddy or defective building works. In fact, the Victorian Government recently overhauled the Domestic Building Contracts Act to set up a new dispute resolution body to conciliate on these matters and to make orders in certain circumstances.

The issue here is about educating owners and committees about these powers. The developers and OC Managers mislead owners and committees by talking about the defect limitation period (DLP) of between 6 – 12 months.

However, this is not the case at all. What they are talking about is completely separate from the 6-year warranty period owed by the builder to residential Owners Corporation under legislation. The DLP refers to the building contract between the developer and the builder only, and has nothing to do with the Owners Corporation.

Yes, the developer can request the builder to return and fix defective work within the DLP, but the point is that at any time in the first 6 years following completion, the Owners Corporation can also request the same.

It is also worth pointing out that some specialized trades such as plumbing are required to carry an insurance policy, so if you are in a building with serious plumbing issues, the Owners Corporation might be able to make a claim against the plumber and their insurer.

A Committee should always take independent legal advice in relation to building defects and it is prudent to start these investigations almost at once after the developer steps down from the Committee in Year Two of the building.

The Shared Values That Underpin a Vertical Community

strata title lawyers, Strata Law, Owners Corporation

For committees in decision-making capacities, sometimes balancing the competing interests of owners and residents can be a daunting prospect.

The microcosm that makes up an apartment buildings contains many moving parts and shifting sands and the owners and residents each have differing characteristics: commercial businesses and retail lots, owner-occupiers, families, renters and investors, baby-boomers and first-home buyers alike.

Take a simple example – say, for instance the committee of the owners corporation was faced with a decision about whether to renew the concierge’s agreement. Now, the owner-occupiers and renters would most likely be in favour of the renewal, in order to maintain the building’s high level of cleanliness and service quality, and to ensure continuing high levels of amenity, security and privacy. Investors on the other hand, might favour the concierge agreement being removed or scaled back, in order to lower the owners corporation’s operating costs, maximise rental yield and maximise re-sale prospects. How on earth then, should a committee approach decision-making when these differing interests collide?

The Owners Corporation Act 2006 places a duty on committee members to act in the best interests of the owners corporation and without regard to self-interest. In reality though, this is the beginning and not the end of the question.

Some buildings might not know what the percentage split is between owner-occupiers, renters and tenants are. In order to find out, the OC Manager could take a look at the roll to get a rough idea based on the names and addresses for service.

Another option might be for a survey to be commissioned by the committee to find out about their own building.

Ensuring that the numbers on the committee represented by these different percentage splits is advisable, however it rarely ever happens in my experience.

What might be most useful for committees is to develop a manifesto, or a mission statement. By creating a set of values for which the building stands for, can greatly assist a committee in making decisions and can improve accountability and consistency in decision making by applying the blowtorch to each decision made to ensure that it does not breach the mission statement.

Governments do this all the time when they are bound by a constitution, and any decisions made that go against the constitution can be judicially reviewed. Now, I’m not suggesting that owners corporations make their mission statements a legally binding document – this is more of an informal and internal, but still very important decision-making tool.

For instance, an owners corporation might decide that its mission statement is to be a technologically advanced building with high conservation values and to be an early adopter of new technological means and with an interest in making sure that their building stands for technological progress and a reduced carbon footprint. This might mean that the building focuses on new products for electric car charging stations, smart homes and smart locks, LED lights, solar panels, batteries and timers for VSD drives.

Another building might decide that its mission statement is to make sure that the community is inclusive and tight knit, and to make a real effort to bring the community together for events and to share common amenities by holding rooftop concerts, social sports team events, games nights, communal vegetable gardens or beekeeping.

In whichever way your community forms together, it will be very important for committees to be aware of not just the financial dynamics and the administration of the building, but also the societal impacts of living in high rise.

There must be a recognition that lives can be improved, whether through technology or through friendships and inclusiveness, and I’m sure that in time, there shall be a reckoning where Australians must truly embrace apartment living. And in that time, the ‘early adopters’ will pave the way for the new way of living in Australia and around the world.


The 'Great Energy Rort' That Will bring Owners Corporations to Their Knees

strata title lawyers, Strata Law, Strata Lawyer, strata, law, electricity cost, electricity apartment

As Melbourne swelters through another hot summer which has everyone reaching for the air conditioner remote control, a great scandal for Owners Corporations simmers amidst the whirrs and buzzes of the cooling towers on the rooftops.

The cost of electricity is skyrocketing around the country. I should know – my electricity bills have gone up by almost 100% in the past 18 months.

But imagine not being in control of your own energy futures? Imagine not having the freedom of choice to select your own electricity provider? Imagine being locked in to an uncompetitive long-term electricity contract where you have to pay a price determined not by the market, but by the electricity company itself? Imagine being denied the opportunity to take advantage of new government regulations in the energy sector to provide you with freedom of choice? Imagine being denied the opportunity to ‘go green’ in your building by installing solar or batteries and other forms of renewable energy and to take advantage of lower electricity costs?

This is the depressing reality for hundreds of large apartment buildings and commercial office blocks in Victoria.

A long-standing practice of developers has been for them to avoid having to pay for the costs of installing common property electricity infrastructure and meters by entering into agreements at construction stage with electricity companies whereby the company will install the infrastructure on behalf of the developer in return for lucrative long term bulk energy contracts being signed by the developer on behalf of the new Owners Corporation.

These contracts make it clear that the electricity company own the meters, and gets to decide the price of electricity that it will charge the building and residents, and gets to charge administration fees on top of the electricity costs. It gets even worse when Owners Corporations find out that the electricity company retains ownership of the common property meters, meaning that if the contract is ever terminated, they get to remove the equipment at the Owners Corporation’s cost.

Developers and electricity companies have been getting away with this rort for years, and the galling part about it is that the state government and the commonwealth energy regulator are absolutely silent about doing anything to curb this industry practice.

Then there are those developers that decide to convert the rooftops of buildings into lots and ‘airspace lots’ and retain ownership for themselves. The purpose of this enterprise is to then enter into lucrative long-form leases with telecommunication companies and billboard companies and earn passive income from the rooftop. However, the rooftops not being in the Owners Corporation’s possession means that Committees are not able to take advantage of recent technological advancements in solar power, and are unable to install the infrastructure that would cut the cost of electricity in the building, and lead to less reliance on the already over-supplied national electricity grid.

The solution is simple: First, ban the developer from being able to ‘sell off’ essential services such as electricity meters and gas meters at construction stage. Something as critical as electricity supply should always be common property and in the control of the Owners Corporation itself.

Second, insert one small amendment into the Subdivision Act 1988 to render the rooftop and airspace inalienable, meaning the rooftop and airspace must remain as common property.

These two simple reforms should take the state government a little under 10 minutes to draft the legislation, but its effect would be to safeguard the renewable energy futures of thousands if not hundreds of thousands of Victorians in the future.

However, with 1,400 apartment buildings and commercial buildings set to be built in Melbourne in the next five years, there’s no time to lose. For each new building that’s in the process of being completed, I’ll wager $5 that its energy future has already been corrupted.

The buzz around government circles is that this is a legitimate industry, and that government doesn’t want to do anything to prevent builders and developers from going about their business and making profits for fear that developers move to other markets. Once again, vested interests win out, and reasonable and sensible consumer protection policies are ignored.

Here’s another wager: I’ll give $10 to anyone who wants to bet that I’m wrong that the government does anything about the great energy rort in Victoria…


Strata Land 2017: The Year in Review and Predictions for 2018

strata, Strata Lawyer, strata title lawyers, By-laws, short term letting

As we approach the holiday season and look forward to a well-earned break, it is perhaps important to reflect on the year that’s been and to cast an eye to 2018, which is shaping up to be an important year for those who live in Owners Corporations.

At the absolute top of the list of key events in 2017, was the tragic incident at Greenfell Tower in London. A massive loss of life, and as it is now emerging as the public inquiry starts, a tragedy that could have been minimised or avoided altogether.

In response, the Victorian Government immediately launched its own review into the issues of flammable alucobest cladding which has been installed on an estimated 5000 buildings in Victoria alone, according to the ABC’s Four Corners programme. Now, one wonders why the Victorian Government did not launch this inquiry two years earlier after the Lacrosse fire. The answer is because of course, no person died in the course of the Lacrosse evacuation, however the alucobest cladding issue and the consequent risks to life safety were certainly brought to the industry’s and the authorities’ attention at that time. Still, its’ better late than never that the Inquiry has been launched, and Owners Corporations will watch on with interest as the stakeholders work through the issues and release a policy response.

The other big issue that came out of 2017 was the sting in the tail of the 2016 Balcombe decision from the Supreme Court. Readers will no doubt remember the ruling of the Supreme Court was that Owners Corporations have no statutory powers to create and enforce certain rules that prohibit certain activities and conduct by persons within lots. This case centred on a Rule which restricted short term letting, however the application of the case and the legal principles within it has spread to a number of other situations. VCAT released several decisions in 2017 striking down the validity and enforcement of certain Rules relating to the use of parking spaces, commercial activities within lots, use of common facilities such as pools and gyms, restrictions on pets and the enforcement of security measures within buildings.

Another issue that Owners Corporations were waiting for in 2017 was the resolution of the short-term letting issue. Alas, the government has made no decision on proper regulations for the short-term letting industry after the Bill was defeated in the Upper House of Parliament following sustained submissions and pressure from Owners Corporation advocacy groups. The decision by Government to reintroduce the Bill in December 2017 without making any amendments at all (but rather seeking to put the boat out by announcing a review 2 years after the Bills passes) has to be seen as a failure by the government to listen to persons living in Owners Corporations.

As for 2018 and the Year ahead, well let me gaze into the crystal ball and cast some predictions for Owners Corporations and the people that live within these communities:

  • The Victorian flammable Alucobest cladding inquiry will conclude as a farce, with stakeholders and experts unable to agree on robust solutions and liability for the industry, leaving Owners of buildings with the sole responsibility to remove the flammable cladding and to raise special levies themselves to fix the issue, or bring legal proceedings if they can;
  • A Superior Court will make another decision on the short-term letting issue, and the ability of Owners Corporations to pass and enforce Rules to restrict the lots from being used as quasi-hotels, leaving all parties even more confused in the absence of guidance from Government;
  • The amendments to the Owners Corporation in respect of short-term letting will be defeated again by the Upper House, completing the Labour Government’s embarrassment. The Government refused to implement a single amendment as recommended by the Upper House. Thus, the Bill is doomed to be consigned to the wastebin. In an election year, no Party would want to put their name to this legislation, and risk voter backlash.
  • The current Victorian Government will also delay attempting to pass its reforms to the Owners Corporation Act, again due to the election and the risk of backlash. This legislation has been completed and has been sitting on the shelf for 12 months (parts of it were completed 3 years ago). The reforms are long overdue, but there is concern from Owners Corporations that the reforms do not favour them, and instead favour the OC management industry, as well as developers and builders.
  • On a more positive note, Owners Corporation committees will continue to build relationships with other buildings and with advocacy groups and form together to create a powerful and unified voice to engage with Government constructively and positively to seek solutions to the issues that concern them. Leadership for the industry shall come from within.

Happy holidays to all, and see you in 2018.


Not All Directors and Office Bearers Liability Insurance Policies Are Created Equal

director liability, director liability insurance, strata, Strata Law, Strata By-Laws

Do you sit on the Committee of your Owners Corporation? If you do, are you sure that you and your personal assets are adequately protected if the Committee and the Owners Corporation have proceedings filed against them?

The good news is that adequate and reasonably affordable insurance coverage is readily available. The bad news is that most Owners Corporations do not have adequate coverage.

The problem very often occurs because the directors and officers (D&O) liability coverage is not the focus of the Owners Corporation’s insurance package. The reason it is often not the focus is that most brokers are not intimately familiar with the coverage, and to be honest, this is not a big-ticket item for most brokers. Although it is not the main generator of premium, it is a coverage that requires careful thought. In fact, the OC Manager, who is usually delegated the responsibility to renew or obtain the insurance, should demand that the best available coverage be presented.

The second problem is due to the fact that, most often, the main insurers of Owners Corporations are the direct insurers like the big, nationally-known insurance carriers. (This is not to say that some of these carriers may not have a more comprehensive product available.) These carriers may provide a great product from a property and general liability standpoint; however, they generally do not provide a comprehensive directors and officers liability product. Everyone assumes that they have full coverage. The reality is that "full coverage" and "appropriate coverage" are not the same thing.

There is no question that you get what you pay for in insurance.

In summary, if you cannot answer yes to virtually all of the following questions, your D&O coverage is probably not adequate:

  • Does the definition of insured extend beyond the actual committee members and office bearers?
  • Does the definition of insured protect past, present, and future members?
  • Does the definition of insured include employees (such as caretakers or building managers and cleaners if employed by the OC)?
  • Does the policy provide a defence to claims and proceedings (as opposed to just reimbursing for such costs)?
  • Does the policy cover defamation?
  • Does the policy defend claims seeking non-monetary loss?
  • Does the policy cover wrongful termination or other employer liability claims?
  • Does the policy cover discrimination?
  • Does the policy defend you where there is a claim or lawsuit for failure to maintain or obtain adequate insurance?

The potential claims against Owners Corporations and Committees are only limited by the creativity of plaintiffs and their lawyers.

In these times when people have no qualms or concerns about suing their neighbours, let alone their own Committee or building, the proper protection is worth its weight in gold.

My advice is that each Committee should review their policy and ask your broker and the OC Manager to obtain the maximum possible coverage, relative to the size of the building and the complexity of its issues (and occupants for that matter). It is better to be safe than to be sorry.

Tom Bacon November 2017

The Times They Are-A-Changing

strata, Strata Law, By-laws, Strata By-Laws

If you’re a Baby Boomer serving on your Owners Corporation’s Committee, you may have already begun noticing a shift in the characteristics and tendencies of your fellow members and neighbours. Don’t call me, just email or text.  Can I pay my levies online?  Our community needs to “go green”!  Do we have a Facebook page?

These are just a few of the comments and questions you may have heard from the younger generation of Millennials within your Owners Corporation

Defining the Generations (all age ranges and numbers are estimates)

  • Baby Boomers are the demographic born roughly between the mid 1940s thru the mid 1960s and make up approximately 24% of the population. One of the defining characteristics of Baby Boomers is a strong work ethic.
  • Generation X are the demographic born roughly between the mid 1960s thru the late 1970s and make up approximately 13% of the population. One of the defining characteristics of Gen Xers is entrepreneurship.
  • Millennials are the demographic born roughly between the late 1970s and mid 1990s and make up approximately 22% of the U.S. population. One of the defining characteristics of Millennials is an affinity for technology.

Whether you’re ready or not, Owners Corporations need to start preparing for a generational shift.  Over the next 10 years, Millennials will possibly overtake Baby Boomers in terms of home ownership percentage.  As a result, Owners Corporations will begin to change to reflect the attitudes/wants/needs/personalities of their members.  So how can your community “Bridge the Generational Gap”?

The following list, although far from exhaustive, contain a few useful tips to help your Owners Corporation bridge the gap:

  • The literal “bridge” between the Baby Boomers and the Millennials is Generation X. Gen X’ers within your committee may prove a useful resource in relating to the both younger and older community members.
  • Seek input and participation from representatives of each group. Even if your Committee does not include a particular generational representative, make an effort to include members of each group in the decision-making process.
  • The “Notice” conundrum. Many of our clients, especially those with younger committee members, are eager to shift towards electronic notices, voting, etc.  Although this can be convenient for most, the Association needs to careful that (1) they are complying with the applicable Victorian laws; and (2) that the minority (those who do not use computers or email) are still accounted for, i.e. hard copies are not yet a thing of the past.
  • Plan Ahead. For larger initiatives that appeal to Millennials, such as “Green” initiatives or electric car parking, the community will need to take a longer term approach to ensure that such initiatives have the support of the community and are budgeted for appropriately.
  • Delegate Wisely. If members of the Owners Corporation are eager for a stronger online presence, appoint a computer savvy Millennial to head a social medial campaign.
  • Understand and embrace the generational differences in your community. A “my way or the highway” attitude will almost never result in a positive outcome.

Tom Bacon October 2017

Late for the By-Laws Review?

By-laws, By-Laws Consolidation, Strata By-Laws, Strata Lawyer

If you are an Owners Corporation that has not yet reviewed the by-laws for Its Scheme and you are concerned that you will not be able to meet the deadline set out by the Strata Scheme Management Act 2015 (30 November 2017), here is the solution in only 3 simple steps: 

  1. Call an Extraordinary General Meeting (this may can be carried out by electronic voting).
  2. Pass the following Motion: THAT The Owners - Strata Plan XXXXX RESOLVES, pursuant to clause 4 of Schedule 3 of the Strata Schemes Management Act 2015 to review the by laws for the Scheme and where appropriate to engage a specialised law firm to carry out the review, consolidation and lodgment of the by-laws for the Scheme.
  3. Instruct a solicitor to carry out the review.

By passing the above resolution the Scheme has effectively started the process of reviewing the by-laws and complied with the current legislation.

Why reviewing by-laws?

Not only because it is compulsory under the current legislation, and because the Owners Corporation has a statutory duty to properly administer the Scheme under section 106 of the Strata Schemes Management Act 2015, but also because the Review will give you the opportunity to fix, tidy and strengthen the by-laws regulating your Scheme.

Having by-laws in order will reduce risks of litigation, increase the protection of the Owners Corporation and Strata Committee against potential liability, will remove invalid and un-enforceable by-laws from your set of by-laws.

We are experts in tailoring by-laws for Strata Schemes: whether you have issues with parking spaces, keeping animals, renovations or more we will be able to draft customised by-laws and providing your Scheme with the tool to quickly enforce the rules you think more appropriate for your scheme and in accordance with the new legislation.


Ciro Figaro

November 23, 2017

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 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



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.


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.


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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