THE NSW STRATA MAGAZINE FEBRUARY 2021 • ISSUE 7
INSURANCE OFFER INSIDE SAVE UP TO $500 PG 9 | STRATA INSURANCE SOLUTIONS
GET YOUR RENOVATIONS APPROVALS RIGHT! PG 18-19 | JS MUELLER & CO LAWYERS
POSITIONS ON THE STRATA COMMITTEE QUESTION: What is the procedure when the Secretary/Treasurer and Chairperson are about to resign and no others want to fill the position? What is the procedure when the Secretary/Treasurer and Chairperson are about to resign and no others want to replace their role due to current conflict between owners/other committee members? What happens as to arranging upcoming AGMs etc?
ANSWER: Generally speaking, there are a number of functions of an owners corporation that can only be managed by a strata committee or by a strata managing agent. I assume from your question that your strata plan is self-managed and you do not engage a strata manager to manage the affairs of the building. Generally speaking, there are a number of functions of an owners corporation that can only be managed by a strata committee or a strata managing agent. Conduct of meetings, levying of contributions, banking and insurance are among those functions. If you cannot form a new committee or the other owners in the building do not feel they possess the skills to fulfil the functions of the strata committee, you will need to consider hiring a strata manager.
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Clearly, this is an additional cost but it might be necessary in your circumstances. It may also make sense to engage a strata manager if there has been ongoing issues between owners. A good strata manager can also assist in helping with these tensions.
Michael Ferrier | Eyeon Property Inspections michael.ferrier@eyeon.com.au
COMMON PROPERTY DEFECTS AND REIMBURSEMENT FOR REPAIRS QUESTION: We have received strata approval to lay new laminate on the floor of our apartment. The original concrete floor is not level and needs levelling at a cost of $2000. Would this be strata responsibility? ANSWER: If the sloping floor is considered to be a building defect, rectification of that defect (if any) would be the responsibility of the owners corporation. Sometimes, though we understand there are certain tolerances under the Building Code of Australia, a uneven slab may constitute a building defect in certain circumstances – this link explains acceptable deviations and tolerations: New South Wales: Guide to Standards & Tolerances 2017 If the sloping floor is considered to be a building defect, since the concrete slab is almost always common property, rectification of that defect (if any) would be the responsibility of the owners corporation. However, this could be construed as “upgrading” the common property and therefore your responsibility and not the owners corporation’s. The Owners Corporation may argue that the defect is only a defect because you have elected to change the type of flooring within your lot and that the levelling works are merely preparation works to allow for the timber flooring wherein the original carpet on the existing levelling may be fit for its purpose but not for timber flooring. READ MORE ON THIS TOPIC HERE
Leanne Habib | Premium Strata info@premiumstrata.com.au
You should obtain expert advice on this specialist area.
OLDER BUILDING SAFETY AND MAINTENANCE REQUIREMENTS
QUESTION: We are deciding on refurbishing or replacing original windows in a 1970s apartment building. What should we take into consideration? I own an apartment in an old 1970s brick block in Sydney. The windows are original and aluminium framed. They are in need of seal replacement as they are starting to rattle and whistle in the wind. The owners corporation is reviewing two options: Replacing the old window seals with new one at a cost of approximately $12,000. Replacing all the windows at a cost of $110,000. The company quoting for the window replacement told me that just replacing the existing window seals is illegal under current government laws. I’m not convinced that this is the case. Are you aware of any such government regulation prohibiting the owners corporation from replacing the existing window seals? Any assistance in this matter would be greatly appreciated.
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Gary Stevenson | Windowline info@windowline.com.au
ANSWER: There may be other issues that need to be addressed for the windows to comply with the current requirements. In relation to replacing windows seals in a residential apartment building in NSW there are no specific regulation that would prohibit this. However there may be other issues that need to be addressed for the windows to comply with the current requirements under the NSW Strata Management Act and possibly AS1288 – Glass in buildings—Selection and installation. This is the Australian glazing standard. NSW Strata Management Act – It is a requirement under the child safety provisions of the act, that windows must be fitted with a complying restrictor and many older window frames can’t be restricted and therefore must be replaced.AS1288 – If the glass has to be completely removed to install the new seals it could be argued that the glass should comply with the current glazing standards resulting in thicker glass being required that may not fit into the existing frames. There are other compliance requirements that may need to be addressed if the windows where to be completely replaced depending on the height of the windows from the finished floor level, but this would only apply if the frames were to be completely replaced.
ACCESSING STRATA AND OWNERS CORPORATION INFORMATION QUESTION: Can my neighbour exclude me from accessing the insurance policy? Can my neighbour exclude me from accessing the insurance policy. We have a dispute over a fence and he hasn’t put my name on the policy and says if I need to claim regarding the fence he won’t process it. He rents his duplex out but the policy says 100% owner-occupied.
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Tyrone Shandiman Strata Insurance Solutions tshandiman@iaa.net.au
ANSWER: As a party with an insurable interest in the policy, you are entitled to lodge a claim on the policy and the other owner is not able to stop you from doing so.
When you purchase a strata property, the owners corporation are responsible for insuring the building. The insurance policy includes insurance for lot owners property and lot owners contribute to the costs of the policy, thus meaning they have an insurable interest in the policy. As a party with an insurable interest in the policy, you are entitled to lodge a claim on the policy and the other owner is not able to stop you from doing so. If the other owner seeks to restrict access to the policy, my recommendation is to deal directly with the insurer and ask to lodge a claim.
Should the other owner seek to block your attempts to claim on the policy or if the insurer initially refuses your ability to claim on the grounds you are not an authorised party, you should be able to enforce your insurable interest in the policy by going through the insurers dispute resolution process. The Strata Management Act does not give an owners corporation the ability to restrict a party that has an insurable interest from lodging a claim. In the course of assessment, the insurer will need to determine whether the damage is covered (or excluded) by the policy – this happens after the claim is lodged.
CLARIFICATION ON TIME LIMITS UNDER THE ENVIRONMENTAL PLANNING AND ASSESSMENT ACT 1979 FOR DEFECTIVE BUILDING WORK According to the recent judgement of the Court of Appeal in Bandelle Pty Ltd v Sydney Capitol Hotels Pty Ltd [2020] NSWCA 303, the 10 year long-stop limitation period in the Environmental Planning and Assessment Act 1979 applies to all defective building work regardless of when the defect manifests or who the claimant is.
Background On 2 January 2017, a fire broke out on the ground floor of the Capitol Square Building. The fire activated the building’s fire sprinklers and caused loss and damage to Sydney Capitol Hotels, who was a tenant in the building. The fire was alleged to have been caused by defective work to the building’s exhaust duct system. That work had been carried out in 1997 by Bandelle. Bandelle argued that the claim was statured barred by the long-stop provisions in section 6.20 of the Act which provides at subsection (1): ‘A civil action for loss or damage arising out of or in connection with defective building work or defective subdivision work cannot be brought more than 10 years after the date of completion of the work.’
Supreme Court decision The key question for the Court was whether, on the proper construction of section 6.20 of the Act, the loss or damage suffered by Sydney Capitol Hotels was loss or damage ‘arising out of or in connection with defective building work’. The Supreme Court found the claim was not statute barred by section 6.20 of the Act because Sydney Capitol Hotels was merely an occupier of part of the building, and not the party who contracted with Bandelle to carry out the building work. As such, the loss and damage was caused by the defective building work in an ‘accidental, incidental or indirect sense’ and as such, section 6.20 of the Act did not apply.
Court of Appeal decision The Supreme Court’s decision was overturned on appeal. The Court of Appeal held that section 6.20 of the Act and former section 109ZK apply to all claims for economic loss caused by defective building work. The Court of Appeal stated that the purpose of these sections is to provide a long-stop limitation period, independently of when the damage first manifested and regardless of whether there was a contractual relationship between the builder and the claimant. The Court of Appeal stated ‘The clear object of s 109ZK when enacted was to afford a limitation protection to those engaged in the building industry, irrespective of the nature of the claim, so long as the claim can be shown to be for loss “arising out of or in connection with” or “arising out of or concerning” defective building work. Clearly, the claim being made in the List Proceedings is one for loss arising out of or in connection with or concerning defective building work, namely, constructing or designing the Shaft defectively. There is no reason to construe the provision restrictively in the manner contended for by Capitol.'
What does this mean for you? The effect of this decision is that if you suffer loss or damage arising out of defective building work, you must commence proceedings within 10 years of the date of completion of the building work. Note that the 10 year limitation period under the Act is different to the limitation periods under the Home Building Act 1989 which are two years for non-major defects and six years for major defects. We expect the limitations under the Design and Building Practitioners Act 2020 to be clarified in due course. We strongly recommend that you seek legal advice as to the time limitations in your specific circumstances.
Jasmin H.Singh & Allison Benson Kerin Benson Lawyers allison@kerinbensonlawyers.com.au
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SPECIAL LEVIES, LEVY PAYMENTS AND OVERDUE LEVIES QUESTION: What happens if you get a levy notices for works you think are illegal? What rights do I have to not pay? What happens if you get a levy notices for works you think are illegal? The body corporate have not obtained the correct council permits and I think the work is going to be order to be demolished anyway, what rights do I have not to pay for them?
ANSWER: Regardless of the legality of the purpose for which the money was raised, if meeting the meeting was legal and the notice for the contribution was properly issued I do not see how an owner could withhold payment. Regardless of the legality of the purpose for which the money was raised, if meeting at which the contribution was struck was legal (e.g. notice periods were met and the voting was achieved) and the notice for the contribution was properly issued – I see no reason that an owner could withhold payment. Should the owner withhold payment and the levies fall overdue, they will be liable for interest and risk having debt recovery proceedings take place against them. I suggest that the owner would be best challenging the issue at the tribunal if they believe the owners corporation is acting illegally; they are otherwise able to try and convene a general meeting (by arranging a qualified request) to overturn the decisions regarding the works and the associated levy. 19 Other general meetings 1. The secretary or a strata committee of an owners corporation may convene a general meeting (that is not an annual general meeting) of the owners corporation at any time. 2. The secretary of the owners corporation, or another officer if the secretary is absent, must convene a general meeting (that is not an annual general meeting) of the owners corporation as soon as practicable, and not later than 14 days after, receiving a qualified request. 3. A meeting may be convened on a qualified request even if the first annual general meeting has not been held. 4. A request is a qualified request for the purposes of this section if it is made by one or more owners of a lot or lots in the strata scheme having a total unit entitlement of at least Andrew Terrell | Bright & Duggan one-quarter of the aggregate unit Andrew.Terrell@bright-duggan.com.au entitlements.
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DUTY TO MAINTAIN AND REPAIR COMMON PROPERTY QUESTION: Our owners corporation is up for $200,000 to repair concrete spalling in one unit. Larger units have to pay more. How is this fair? Can we limit our liability? I am the owner/ occupier and Strata Committee Member of a 4 bedroom unit in a block of 12 units. Within the scheme, there are also some 2 bedroom units. Last year, a 2 bedroom unit was sold. During renovations by the new owner, concrete cancer was found. The Strata Manager engaged an engineer. Coring samples were taken and the report showed extensive concrete spalling. We have been informed that, for this flat alone, the owners corporation must pay for:
rectification of all the floors throughout this flat balcony rectification and retiling kitchen cupboards etc and tiling.ie total renovation bathroom renovations and new fixtures such as vanity, etc. We’ve been quoted from $200,000 for the repairs. Lot owners in larger flats are to pay a larger share. Is this fair and equitable? The lot owners would like to know the legal limits of our financial liability. Do we need to pay for total kitchen and bathroom renovations (cupboards, fixtures, taps, shower cubicle, vanity etc) of this old flat which was about to be renovated anyway by the new owner? Do we have a legal right to refuse to pay for these “extras” except the rectification of the concrete cancer in the floor? Could the owner legally apply for rent loss from us? The spalling in the kitchen / living room area was caused by long term water ingress due to leaky windows and balcony doors in times of windy storms. The Strata Manager had known for a long time that the windows and balcony doors let in water. Are we able to claim any of this on strata insurance?
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Leanne Habib | Premium Strata info@premiumstrata.com.au
Do we need to get legal advice to set limits to our liability? The matter was not discussed with the Owners Committee. We were just “informed” of the cost. How do other affected strata blocks handle such a situation?
ANSWER: All costs and expenses of an owners corporation for the repair of lot and common property caused by a defect in the common property must be paid for by all individual owners in proportion to their unit entitlements. All costs and expenses of an owners corporation for the repair of lot and common property caused by a defect in the common property must be paid for by all individual owners in proportion to their unit entitlements.
Does the owners corporation have to pay for the bathroom and kitchen? If these items were damaged due a defect in the common property, then yes, you do need to pay for total kitchen and bathroom renovations, however it is difficult to see how taps could be damaged – in our view they could likely be reused. The Owners Corporation only has to repair like for like and any superior finishes should be the responsibility of the individual owner. For example, if the kitchen contained vinyl benchtops and the owner wanted, say, replacement with granite, this upgrade would be at the cost of the individual owner. Lot owners do not have the legal right to refuse to pay for any “extras” if there is evidence that the defect in the common property caused the damage to lot property.
Could the owner legally apply for loss of rent? An owner of a lot in a strata scheme may recover rent loss from the owners corporation, as damages for breach of statutory duty (ie the defect in the common property), any reasonably foreseeable loss suffered by the owner as a result of a contravention of this section by the owners corporation.
The Owners Corporation is under a strict statutory duty to keep all the common property in good and serviceable repair.
Can this damage be claimed on strata insurance? Some leaky pipes water damage may be covered, however, generally, building defects, wear and tear, general maintenance are generally excluded under the strata building insurance policy. You must review the specific terms of your insurance.
Can the owners corporation limit their liability? It is always prudent to obtain legal advice, however, the engineer’s report will likely determine what damage has been caused and what the source of that damage was (and therefore, who was liable).
RESIDENT PARKING ON COMMON PROPERTY QUESTION: We have 8 units, with 2 carports. Residents are parking their cars on the shared driveway. Shouldn’t the driveway be kept clear to allow access to the vehicles that are parked in the carports & for any vehicles that might be making deliveries to any of the 8 units?
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ANSWER: Parking anywhere on or obstructing the common property is likely prohibited by the by-laws applicable to your scheme unless the Owners Corporation has given express approval. The parking on common property without approval and obstructing other resident’s vehicles may constitute nuisance.
Leanne Habib | Premium Strata info@premiumstrata.com.au
GET
YOUR
RENOVATIONS
APPROVALS READ MORE ON THIS TOPIC HERE
RIGHT!
Adrian Mueller | JS Mueller & Co Lawyers adrianmueller@muellers.com.au
A recent decision by NCAT has provided guidance on what needs to be done for an owners corporation to approve renovations done by an owner. The case produced a surprising outcome and is likely to change the practice that is followed by owners who seek owners corporation approval to renovate.
Introduction The case of The Owners – Strata Plan No. 63731 v B&G Trading Pty Ltd [2020] NSW CATAP 202 involved a dispute between the owners corporation of a large mixed use building in Milsons Point and the owner of a commercial lot in the building. In about 2017, the owner wanted to fit-out their lot as an office. The fitout involved some work to the common property and did so between December 2017 and August 2018.
The Issues By-law 32 was a developer by-law registered with the strata plan. By-law 32 granted the owner the special privilege to carry out works on the lot that would alter common property without first obtaining the consent of the owners corporation. The owners corporation did not consider that by-law 32 granted the owner any authority to fit-out the lot without its consent. The owners corporation applied to NCAT for orders to require the owner to remove the fit-out work done to the common property and reinstate the common property to its previous condition and pay compensation. The owners corporation was unsuccessful and appealed to the Appeal Panel of NCAT.
The Decision The Appeal Panel had to decide whether a developer by-law, such as by-law 32 could authorise an owner to carry out alterations to the common property in connection with the lot. The Appeal Panel concluded that it is not possible for a developer by-law to do so. Further, the Appeal Panel held that, similarly, a common property rights by-law is not able to authorise an owner to carry out works affecting the common property.
The key finding of the Appeal Panel was that the only way in which an owner can obtain the authority of an owners corporation to carry out works that affect common property (apart from cosmetic work or minor renovations) is by a special resolution that is passed at a general meeting and which specifically authorises the owner the take the particular action proposed.
A Surprising Outcome The case produced a surprising outcome. For many years, developers have made by-laws that are registered with strata plans that permit certain owners to carry out works particularly works to fitout commercial lots. This decision means that it is not possible for developer by-laws to grant owners the right to carry out works that affect common property. The case also produced another surprising outcome. For many years, common property rights by-laws have been used to authorise owners to carry out works to common property by granting them a special privilege to do so. This case means that common property rights by-laws cannot be used to authorise owners to carry out works to common property.
The Wash Up There are several key messages to take away from the case. These are as follows: 1. All existing “works� by-laws and renovations by-laws should be reviewed to assess whether they property authorise owners to carry out works to common property and any necessary changes to be made those by-laws to ensure they are valid and enforceable. 2. Any owners who want to apply to an owners corporation for permission to carry out works to common property that are not cosmetic work or minor renovations needs to have that work authorised by a special resolution that is passed at a general meeting of the owners corporation. 3. Any motion or by-law that is proposed to authorise an owner to carry out work to common property must be carefully drafted to ensure it properly authorises the owner to carry out the work.
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More Than Strata Managing your scheme like a business P: 1300 044 979 W: https://morethanstrata.com.au/ E: service@morethanstrata.com.au
The Strata Collective A next generation strata manager. People matter. P: 02 9879 3547 W: https://www.thestratacollective.com.au/ E: rsmith@thestratacollective.com.au
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Strata Management Consultants We Help Committees to Change OC Companies P: 1300 917 848 W: http://www.strataconsultants.com.au/ E: office@strataconsultants.com.au
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Kerin Benson Lawyers Pty Ltd Strata, Community Titles & Construction Lawyers P: 02 8706 7060 W: https://kerinbensonlawyers.com.au/ E: enquiries@kerinbensonlawyers.com.au
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Bannermans Lawyers High Quality Specialist Legal Services P: 02 9929 0226 W: https://www.bannermans.com.au/ E: enquiries@bannermans.com.au
Lewis & Charles Lawyers Law shouldn’t be hard, so we’ve made law easy P: 02 8095 6263 W: http://www.lewischarles.com.au/ E: carlofini@lewischarles.com.au
JS Mueller & Co Lawyers Specialist NSW Strata Lawyers P: 02 9562 1266 W: http://www.muellers.com.au/ E: enquiries@muellers.com.au
Speirs Ryan Client focused, boutique property law firm P: 02 9248 3400 W: https://www.speirsryan.com.au/ E: ssaw@speirsryan.com.au
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Watson & Watson Lawyers “when experience matters”….. P: 02 9221 6011 W: https://www.watsonandwatson.com.au/ E: richard@watsonandwatson.com.au
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Specialising in property development & strata law.
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Lannock Strata Finance The Leading Strata Finance Specialist P: 1300 851 585 W: https://lannock.com.au/ E: strata@lannock.com.au
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Specialist Auditor of Owners Corporation Financial Reports
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Painting & Decorating
Lifts/Elevators
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Building Repair/Maintenance
Quality Building Management keeping your buildings legally compliant and safe. P: 13 0088 0466 W: https://qbm.com.au/ E: qbm@qbm.com.au
Johns Lyng Group 24/7 Response P: 1300 736 000 W: https://www.johnslyng.com.au/ E: strata@johnslyng.com.au
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Safety & Security
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Glaziers/Window Repair & Maintenance Windowline Pty Ltd
Australia’s strata replacement window & door specialists
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Antenna Installation
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Waterproofing Danrae Group Remedial Waterproofing & Building Specialists P: 1800 326 723 W: https://www.danraegroup.com.au/ E: enquiries@danrae.com.au Superseal Protective Coatings (SPC) Waterproofing & Epoxy Specialists P: (02) 9774 1004 W: https://www.spcau.com/ E: info@spcau.com The Superseal Group Trusted Experts in all aspects of Waterproofing P: +61755194916 W: http://supersealgroup.com/ E: admin@supersealgroup.com
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Electrical McIntosh Electrical Pty Ltd The Electrical Strata Specialists You Can Rely On P: 1300 627 727 W: https://www.mcintoshelectrical.com.au/ E: jenny@mcintoshelectrical.com.au ENM Solutions Providing Solutions for Embedded Networks P: 03 9836 6366 W: http://www.enmsolutions.com.au/ E: info@ENMSolutions.com.au
Telecommunications & Internet LDC Infrastructure
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Building Consultant/Engineer HFM Asset Management Pty Ltd Building Efficiency P: 1300 021 420 W: https://www.hfmassets.com.au/ E: info@hfmassets.com.au
Silver Wolf Projects Pty Ltd Responsive, Innovative Engineering P: 02 9358 2263 W: https://www.silverwolfprojects.com.au/ E: info@silverwolfprojects.com.au
Savil Group We Fix Broken Buildings P: 0400 567 989 W: https://www.savilgroup.com.au/ E: dimitri@savilgroup.com.au
Sedgwick Building Consultancy Division & Repair Solutions P: 1300 735 720 W: https://www.sedgwick.com/solutions/global/au E: info@au.sedgwick.com
Auric Projects Managing clients’ property projects professionally P: 02 9918 2200 W: https://auricprojects.com.au/ E: info@auricprojects.com.au
Gallagher Jeffs Move Forward with Confidence P: 03 8610 3888 W: https://www.gallagherjeffs.com.au/ E: communication@gj.com.au
Roscon Property services & facilities management P: 1800 767 266 W: https://www.roscon.com.au/ E: info@roscon.com RESI-TECH Building Consultants
Specialising in providing technical advice & solutions
P: 02 9743 6160 W: http://www.resi-tech.com.au/ E: reception@resi-tech.com.au
Landlay Consulting Group A Strata Remedial Consultancy P: 02 8095 8556 W: https://www.landlay.com.au/ E: admin@landlay.com.au Leary & Partners Australia wide quantity surveying services P: 1800 808 991 W: https://www.leary.com.au/ E: enquiries@leary.com.au Mabi Services Valuations, Maintenance Plans, Asbestos P: 1300 762 295 W: https://www.mabi.com.au/ E: info@mabi.com.au Core Project Consulting Independent Expertise. We’ve got you covered! P: 02 8961 3250 W: https://core.engineering/ E: admin@core.engineering
Software MYBOS A cloud based building management system P: 1300 912 386 W: http://www.mybos.com.au/ E: sam@mybos.com.au Stratabox Building Confidence P: 1300 651 506 W: https://stratabox.com.au/ E: contact@stratabox.com.au Mimor Connecting People – Creating Communities P: 0414 228 644 W: http://www.mimor.com.au/ E: info@mimor.com.au StrataMax Streamlining strata P: 1800 656368 W: http://www.stratamax.com/ E: info@stratamax.com Strata Vault Securely share documents with third parties P: 1300 0 VAULT (82858) W: http://www.stratavaults.com/ E: julie@thestratavault.com
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