The NSW Strata Magazine | Aug 2020

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QUESTION: Can the owners corporation fix my neighbour’s leaking verandah? My mother's apartment has a flat above. The verandah area is partly over her lounge and for the last year she has been suffering due to the upstair's verandah leaking through her roof. They are new owners who recently renovated the verandah and since then it has leaked. The Strata company don't appear to be doing

ANSWER: The owners corporation must properly maintain and keep in a state of good and serviceable report the common property in accordance with section 106 of the Strata Schemes Management Act 2015 (the Act). While the exact cause of the balcony leakage is unknown, this is likely an issue with the common property. In addition, the provisions of the by-laws and building management statement, if any, should also be taken into account as they may impose more specific requirements in addition to the general requirements under the Act. Who has responsibility for the ongoing maintenance of a renovated balcony/verandah? It is unclear what kind of renovation has occurred and whether prior approval by the owners corporation is required (and obtained). If there was a special resolution approving the renovation under section 108 of the Act that specifies that the ongoing maintenance of the balcony after its renovation is to be the responsibility of the owner, instead of the owners corporation, then it is up to your neighbour to fix the leakage. However the more likely scenario is that the

anything. Supposedly some repairs were done recently but the roof still leaks. How can get things moving to resolve the leak? My Mother is about to return home after being in hospital and is absolutely devastated that nothing has been done. She is 85 and this is her home, which is becoming unliveable! renovations were completed either without owners corporation approval, owners corporation approval, or with a special by-law registered to the effect that the owner of the lot undertaking renovation work indemnifies the owners corporation for any liabilities arising from the renovation. If that is the case, the primary person responsible for fixing the issue, as far as all other owners in the strata scheme are concerned, would still be the owners corporation. Consequences of the owners corporation not fulfilling their duty to maintain and repair common property According to section 106 of the Act, an owner of a lot in a strata scheme may recover from the owners corporation, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the owner as a result of a contravention of this section by the owners corporation. It may however be difficult to quantify the loss associated with the general unpleasantness of the water leakage and the consequent limited use / enjoyment of part of the units. Â You may also consider joining the strata managing agent to any claim that you may have against the owners corporation if the managing agent has not fulfilled its duties.

Next steps 1. Review previous minutes for general meetings to find out if there is any special by-law that was proposed for your neighbour’s renovated verandah. 2. If there is no by-law that negates the owners corporation’s obligations then write to the strata manager and the secretary requesting their Yuhao Gu| Omega Legal

immediate action to fix the leakage and/or propose a motion for an upcoming general meeting for the issue to be attended to and that the contract with the current strata manager not to be renewed and another strata manager appointed. 3. If the matter remains unresolved, you can lodge an application for mediation with NSW Fair Trading or start proceedings in NSW Civil and Administrative Tribunal.

Ask Us Anything

(NSW Strata Insurance)

QUESTION: I live in a strata complex of 17 townhouses. If there are exterior lights and they are turned off at midnight and a resident or visitor has an accident will we be covered under our insurance public liability? I live in a strata complex of 17 townhouses. If there are exterior lights and they are turned off at midnight and a resident or visitor has an accident will we be covered under our insurance public liability? When looking at liability, do they take into account the residents in the building? So if you had a building that had the majority of elderly residents who might be more inclined to trip, is that taken into account at all or?

ANSWER: The short answer is yes The short answer is yes. But I'll expand on that a little bit further. So you've got two things to consider. What are the terms, conditions and exclusions of the policy? Right, so the answer to that question is that there is no term, condition or exclusion around lighting in Australia policy. So there wouldn't necessarily be an exclusion that would apply to that claim. You need to consider risk management. If you think that turning the lights off is creating a hazard then you should consider whether, from a risk management perspective, looking at the risks versus the cost benefit, whether it's worth keeping the lights on. If you have a claim, and that's been brought to the committee's attention, that increases your negligence at the time of the claim if someone is injured.

You can't just look at it from 'is it covered?', but you also need to consider what the implications are if we don't address this risk issue. Often it can mean a higher cost of a claim, and also subsequently, a more adverse claims history. When it comes to a legal claim, obviously lawyers will put their arguments forward as to how much someone knows and did you breach your duty of care and so on? All of those things are factored into a claim and settlements and how solicitors run their arguments if they are suing the body corporate so definitely, every building is individual its own nature and you should consider what's appropriate for your specific building. Tyrone Shandiman | Strata Insurance Solutions

Exclusive Special Offer Mention this offer when requesting a quote from Strata Insurance Solutions and we will provide a $250 (GST Incl) discount off our standard fee for service for buildings with 10-25 lots or a $500 (GST incl) discount off our standard fee for service for buildings with more than 25 lots for the first year you insure with Strata Insurance Solutions. To redeem this offer send a copy of your current policy schedule to Tyrone Shandiman, Strata Insurance Solutions by 8th September 2020. The policy can expire any time in the next 12 months, however we can only provide quotes 30 days prior to the expiry of your poilcy - if your policy is not due now, we will schedule to quote at the appropriate time. To ensure we apply this offer to our quotes, please specifically mention you would like to redeem the “LookUpStrata special offer�.

Design and Building Practitioners Introduction The NSW Parliament recently passed the Design and Building Practitioners Act 2020 (“DBPA”).

New Statutory Duty of Care Part 4 of the DBPA, which commenced on 11 June 2020, establishes a new statutory duty of care. Generally speaking, any person who carries out construction work will have a duty to exercise reasonable care to avoid economic loss caused by defects in or related to a building for which the construction work is done or arising out of that work (section 37 of the DBPA). “Construction work” is defined under section 36 of the DBPA to mean any of the following: (a) building work (which includes residential building work within the meaning of the Home Building Act 1989); (b) the preparation of regulated designs and other designs for building work; (c) the manufacture or supply of a building product used for building; (d) supervising, coordinating, project managing or otherwise having substantive control over the carrying out of any work referred to in paragraph (a), (b) or (c) above. The duty of care extends to construction work carried out before the commencement of Part 4 of the DBPA if the economic loss caused by a breach of

the duty of care first became apparent within the 10 years immediately before the commencement of the DPBA. Therefore, the duty of care under Part 4 of the DBPA is retrospective. The duty of care is owed to each owner of the land in relation to which the construction work is carried out and to each subsequent owner of the land on which the construction work is or was carried out and whether it was carried out under a contract or other arrangement with the owner or a previous owner. These owners are defined to include the owners of a lot in a strata scheme, development lot or neighbourhood lot within a community scheme, the owners corporation, community association, precinct scheme and neighbourhood scheme. A person to whom the duty of care is owed is entitled to claim damages for the breach of the duty such as the costs of rectifying the defects, consequential loss caused by the defects and the reasonable costs of providing alternative accommodation where necessary. Accordingly, owners corporations can now directly pursue other parties involved in the construction work in addition to the builder and developer such as engineers, architects, designers, project managers, subcontractors, suppliers or manufacturers.

Act 2020 – Building Defect Claims It is also important to note the following: The duty of care under Part 4 cannot be delegated or contracted out of; The statutory warranties or other obligations imposed under the Home Building Act 1989, other Acts or the common law are not limited by the new duty of care so that a claim for breach of duty of care under section 37 of the DBPA can be added in existing proceedings commenced under the Home Building Act 1989;

Going Forward Owners corporations (and their strata managers) should obtain advice in relation to the owners corporation’s options and rights to claim under the new duty of care. Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.

The duty of care under Part 4 does not limit damages or other compensation that may be available to a person under another Act or at common law because of a breach of a duty by a person who carries out construction work; The duty of care is subject to the limitation period that applies to negligence claims under the Limitation Act 1969 meaning there will be strict time limits to bring a negligence claim; Claims under Part 4 are subject to the Civil Liability Act 2002e. proportionality claims will apply to the new duty of care; and Claims under Part 4 are subject to the 10 year long stop period from the date of completion of the building under s 6.20 of the Environmental Planning and Assessment Act 1979.

Michael Pobi | Pobi Lawyers

Ask Us Anything

(NSW Strata)

Watch the recent live video where Rod answers NSW strata questions live from our audience.

QUESTION: How long after the building is built are we covered for any building defects? We have loud banging noises which have been reported since day one. How long after the building is built are we covered for any defects? We have banging noises which have been reported since day one, and no one can find out what it is. How long are we covered if anything happens to the building? The builder is happy to fix but no one knows what it is.

ANSWER: You need to work out what the problem is before you can work out who's responsible. Banging noises in my experience is usually a thing called water hammer. Water hammer happens when the pipes in the building have pressure in them and they bash against each other. Or it's sometimes the cause of the noise is the lift, but I'd say its water hammer. We had this issue in one of our city buildings and we had a hydraulic engineer come and work out what needed to be done. I've also had the problem in smaller buildings that didn't get a hydraulic engineer.

They turned down the water pressure on the pumps as well as the hot water system so the water wasn't flying up and causing that bang. There are sometimes a few things you can do about that. The easiest way to find out what the issue is, is to get your local plumber or your pump technician to have a look at it and see if there's anything that they can see. If not, you can get a hydraulic report. But, to answer your question I think you need to work out what the problem is before you can work out who's responsible. It's awesome that the builder wants to come back, but I think you'll probably need to do them a favour and try and work with them or maybe even their original hydraulic engineer and work out what's causing the problems. Look at how to fix it and solutions around that and then have the conversation. Rod Smith | The Strata Collective

QUESTION: For the past 10 years, I have been sticking down loose and drumming tiles in my bathroom. I now feel the time has come to renovate my bathroom, laundry and toilet which all have damaged and or broken tiles. Should the body corporate pay for the removal of the old tiles and waterproof and laying of new floor tiles also one tile up to all rooms and allow me to pay the remaining cost of the bathroom renovation?

Leanne Habib | Premium Strata

ANSWER: Generally speaking (and subject to the by-laws applicable to your scheme, any special resolutions divesting the Owners Corporation of responsibility for tiles/waterproofing and any notations on the strata plan) such tiles/and waterproofing and depending on the location of wall tiles, are common property. Therefore, they are the responsibility of the Owners Corporation to repair and maintain. The difficulty is that the Owners Corporation may not be responsible to fully replace all the tiles and is strictly speaking only responsible to fix the defective ones (unless a close match is unavailable in which case all the tiles must be replaced). You should approach your strata manager who may be able give you guidance on how to best approach the issues, as the Owners Corporation might agree to contribute to your works and once a by-law is passed for your renovations, you will have the ongoing responsibility for repair and maintenance of all parts of your bathroom etc.

Disposing of Goods Abandoned on Common Property - New Laws

Have you heard of the latest changes to laws surrounding abandoned goods on common property? As from 1 July 2020, new laws apply to disposal of goods abandoned on common property and association property of strata schemes and community associations. New legislation came into force on that date, amending various acts and effectively transferring regulation of goods abandoned on strata common property from the Strata Schemes Management Act 2015 (“SSMA”) to the Uncollected Goods Act 1995 (“Act”) and extending this to community associations.

Key Points: The procedures previously available under the SSMA are no longer available. A person disposing of goods will have no liability if they have done so in accordance with the Act or an order of the Tribunal. The Act divides goods into various categories and applies rules depending on their value. Notices may be served electronically by email or messaging service.

Bannermans Lawyers

A party disposing of uncollected goods must keep appropriate records for at least 12 months in the case of low value uncollected goods and otherwise for six years. The Tribunal is given power to make an order for disposal of the goods. The Tribunal can also make various orders on application by the Depositor or other person having an interest in the goods, but imposes time limits:


THE SURVEY CLOSES 11.59pm on Sunday 9 August

QUESTION: For an attached duplex in NSW, what are the requirements? Do we need an administration and sinking fund? How about strata insurance for the common property? I live in a duplex. The building is not detached as the lots share a common wall. I'm wondering what our requirements are. Do we need an admin and sinking fund for repairs maintenance, pest sprays etc is for two owners to share. How about strata insurance for the common property?

ANSWER: As your building is attached and shares a common wall then you would be required to obtain building insurance for the common areas and also establish an administration and capital works fund. The Strata Schemes Management Act 2015 includes special provisions for owners in a two-lot scheme and they include the below: Accounts & finance statements are not required to be audited A quorum in a two-lot scheme with two owners is always two people entitled to vote The strata committee is made up of an owner from each lot Owners can obtain their own building insurance for their lot, and be exempt from having a capital works fund if: o The building in each lot are physically detached; o No building or part of a building is situated outside the lots; and o The owners pass a unanimous resolution for the owners corporation not to have building insurance for both buildings and/or not to have a sinking fund. The above list applies to your property, but we draw your attention to the last point around the insurance and capital works fund. As your building is attached and shares a common wall then you would be required to obtain building and

insurance for the common areas and also establish an administration capital works fund. However should yourself and the other lot owner decide that you would prefer to not have shared insurance and not establish a capital works fund, then you could hold a General Meeting and pass a unanimous resolution to remove those requirements. Further requirements for your owners corporation would to hold an Annual General Meeting each year and also have an administration fund established to cover the day to day expenses for the common property which would include the insurance if no special resolution is passed and things like the annual pest treatments, lawn mowing etc. You are able to find what should be included in an Annual General Meeting and also further information around Strata Schemes with two lots on the Office of Fair Trading’s website [].

Jane Giacobbe | Strata Reports Victoria & NSW

Strata Management’s Number 1 Question – Are My Body Corporate Levies Too High?

The How Long is a Piece of Body Corporate String Question “I’m paying $xxx in body corporate levies, is that too high?” It’s a question that we get a lot here at Strata Management Consultants and I’m sure if you ask every strata manager out there it would be in their list of top 5 questions that they’re asked. And of course – we understand – whether you’re an owner-occupier or an investor it’s a very important question. One of the first things we do with every building and strata management Committee that we work with is to review the financial statements. May not necessarily sound fun but it’s very informative for us. The income and expenditure statement and balance sheet tell many things: • The financial health of the owners corporation as a going concern; • How much money is collected from each owner and what it is being spent on; • What facilities and amenities the building / owners corporation has;

• The state of arrears and the quantum of levies owed to the owners corporation; and • How much the strata management company is charging the owners corporation (by summing up all the line items that go into the strata manager’s pocket).

Asking the Right Strata Management Question The approach that should be taken isn’t whether you’re paying $1,500 per year when think you should be paying $1,300 – or why is it that your friend in a similar building pays $200 less per quarter in owners corporation levies… Yes – no pools, no lifts, and no tennis courts – should in general result in lower owners corporation levies. However, each and every building is different. Each and every owners corporation is different. Each building is at its own stage in its life cycle and have its own set of issues to contend with. So, there are at least quite a few variables that stem from that.

David Lin | Strata Management Consultants

Reviewing the Strata Management Financials

What is the emergency service call fee? Should we speak to another lift service company to get another opinion on the lift servicing cost?

Look at each and every line item in your latest full year’s income and expenditure statement and ask the following:

• Repairs & maintenance – what has happened in the real world? Have we had plumbing issues or has the garage door been repaired? Did we obtain multiple quotes for larger scopes of work? How good and reliable are our tradespeople?

• Caretaking/cleaning/building management costs divide by 52 weeks in the year – does that seem • Utilities – what is commonly and what is fair and reasonable for the services that we receive individually metered? Do the lights in the basement as a building? stay on all the time or should they be a sensor • What fire safety and essential services equipment system? Is there a water leak if the water bill is do we have around the building – does the costs to unreasonably high? Would the owners corporation service/check this equipment seem appropriate? benefit from switching hallway lights to LED? • Insurance premium – what exactly is the policy covering (replacement value, machinery, public liability, office bearer’s liability)? Do we have the right coverage and are the amounts sufficient? Have had claims in recent years? How much has the insurance premium been increasing in the last few years? • Lift service costs – how many lifts do we have? How many stops is each lift (i.e. how many floors does the lift service)? How long is the lift service contract? How many times per year does the lift technician attend to service the lift? Are parts included in the contract in the fee or just labour?

• Strata management costs – how good is the service, advice, and responsiveness that we’re getting from the strata manager? Did the strata management company get given the contract from the builder or developer without due process? What should be included in their contract and what extras is the owners corporation being charged? If the strata manager’s costs are reasonable and their performance is exceptional should we agree to a pay increment when the contract comes up? So that’s certainly not a definitive list but hopefully it helps with your investigations and in helping to understand where your body corporate levies go.

Can a By-law be Challenged while a Scheme is Under Compulsory Management? Jasmin H. Singh & Allison Benson | Kerin Benson Lawyers

In Morgan-Jones & Ufert v The Owners Strata Plan No 15599 [2019] NSWCATAP 187, the applicants, who owned a lot in the scheme, sought to challenge two of the scheme’s bylaws under section 150 of the Strata Schemes Management Act 2015 while the scheme was under compulsory management. The tribunal at first instance dismissed the application on the grounds that the lot owners did not have standing to bring the application while the scheme was under compulsory management and the compulsory strata manager had full powers of governance of the owners corporation and the strata committee. Those full governance powers were the terms on which the appellants had successfully obtained the appointment of the compulsory strata manager for a defined term in earlier proceedings. The primary member stated that such broad powers removed the power of lot owners to vote on a by-law because there was no

requirement for the compulsory strata manager to put a proposal to such a vote of lot owners, and section 150 of the Strata Schemes Management Act 2015 gave standing only to those entitled to vote on the challenged bylaw.The appeal panel agreed with the findings of the primary member that the appellants had no standing to bring an application to challenge two of the scheme’s by-laws under section 150 of the Strata Schemes Management Act 2015 while the scheme was under compulsory management with the powers of the owners corporation and the strata committee.

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QUESTION: Our strata was involved in a matter with the Lands and Environment Court. The Barrister's fees were never approved at an EGM. Who is responsible? We are a small strata of 5 townhouses all with different unit entitlements. All owners are members of the Executive Committee.

His invoice states his rates had been approved. It does not say who has signed the agreement. The admin fund is already in the negative.

Recently we were involved in a matter in the Land and Environment court. The fees of the solicitor who was selected to represent the OC were approved at an EGM. The total estimate from him was approximately $36,000. However the fees of the barrister were not approved at an EGM or ECM. His bill has come in at $43,000.

It seems the appropriate processes have not been followed. Who is responsible for paying for the Barrister in these circumstances? Is it the individual who signed without the approval of the OC?

ANSWER: The legal process may have been followed but you may not be aware. Was there a meeting where the approval took place? I am wondering if you may have overlooked some paperwork or even unreceived minutes. We’ve had this happen recently where someone didn’t get an agenda. The legal process may have been followed but you may not be aware.

services does not exceed $3,000.

I don’t see the barrister's engagement any different from any other legal fees - this is per regs:

However, one needs to be mindful that litigation was afoot and hence the scheme needs to be best represented. The legislation also provides….

Strata Schemes Management Regulation 2016


Part 3 Clause 26 26 Approval for legal services costs (1) The amount of $15,000 is prescribed for the purposes of section 103 (2) (b) of the Act. (2) For the purposes of section 103 of the Act, approval is not required under that section to the obtaining of legal services in relation to a matter that is not urgent if the cost of the legal

103 Legal services to be approved by general meeting (1) An owners corporation or strata committee of an owners corporation must not obtain legal services for which any payment may be required unless a resolution approving the obtaining of those services is passed at a general meeting of the owners corporation.

(2) An owners corporation or strata committee may obtain legal services without obtaining approval under this section if: (a) it is of the opinion that urgent action is necessary to protect the interests of the owners corporation, and (b) the cost of the legal services does not exceed $10,000 or another amount prescribed by the regulations for the purposes of this subsection. (3) Approval under this section is not required for the following: (a) to obtain legal advice before commencing legal action, (b) to take legal action to recover unpaid contributions, interest on unpaid contributions or related expenses, (c) to take any other legal action prescribed by the regulations for the purposes of this section. (4) A failure by an owners corporation or the strata committee of an owners corporation to obtain an approval under this section does not affect the validity of any proceedings or other legal action taken by the owners corporation. (5) In this Division: "legal services" includes obtaining legal advice and taking legal action. So whilst one can ask all the questions - it is highly likely that the scheme is still stuck with the bill. The case law on this is Bakkante and Elizabeth Bay Pty Ltd. The question is has the decision to have them been ratified? Karina Heinz | Progressive Strata Services

'Nothing To See Here' Owners Corporations and Security Cameras Warwick van Ede | JS Mueller & Co Lawyers

The use of surveillance cameras in both private and public spaces is increasing significantly. Cameras are installed by local councils and private enterprise, and you can expect to be digitally recorded walking into a shopping centre, travelling on public transport, and even taking the dog for a walk in a local park. An often vexed issue is what rights lot owners and owners corporations have to install their own security cameras. Â Two recent NCAT decisions confirm that lot owners generally do not have the right to install security cameras on common property without first obtaining the consent of the owners corporation. Where they do not obtain that consent, then the owners corporation is entitled to require the security cameras to be removed. Â However, there are also lessons for owners corporations, with the possibility that owners corporations and lot owners may commit an offence under the Surveillance Devices Act 2007 (NSW). Almost every owners corporation will have a by-law or bylaws which will be able to prevent a lot owner from installing CCTV cameras on common property without the consent of the owners corporation, and owners corporations should not hesitate to require lot owners to comply by either obtaining consent from the owners corporation or removing CCTV cameras which have been installed without consent. It is also timely for strata managers to bring to the attention of owners corporations the potential difficulties or individuals and for corporations under the Surveillance Devices Act, and the need to take great care when it comes to the installation of surveillance devices. If owners corporations take the step of initiating security cameras themselves, they risk committing an offence pursuant to the Surveillance Devices Act.


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