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Summer 2013

Proposed Strata Reforms Released – The Industry Have Their Say Strata’s Next Generation Moral Dilemma with Strata Brokerage


CONTENTS

Contents 9-19

Proposed Strata Reforms

22-25

News from Strata Community Australia

28

Want a Career in Strata Management

30-31

Three Red Judges Make New Strata Laws

34-39

Around the Traps – Who is Celebrating

40-43

Strata in Conversation – Next Generation

45-49

Strata 101 – NSW Fair Trading

54-55

Steps to Mediation

57

New Strata Video Aids

60

Getting Ready for the Holiday Season

61

How your Levies are Set

63-67

Four of the Best – CBRE Residential

69

By-laws Prohibiting On-Site Auctions

72-73

Dealing with Personal Cheques

74

Levy Shock

76-85

Strata Made Easy – Supported by Westpac

86-87

Dodgy Tenants: How to Spot and Avoid Them

89-97 Q&A 98

The Importance of Using Licensed Tradies

100-101

A New Way to Shop

102-105

Eliza Apartments

106-107

The Name Game

108-109

How to Make it a Smooth Move

110-111 Converting from Commercial Space to Residential

4 StrataLive Summer 2013


WELCOME

Welcome to your Summer Edition of StrataLive

W

ell, after 50 odd years the proposed strata reforms have finally been released – and by all accounts, the wait was worth it. The industry has their say about the improvements for the millions who choose the strata way of life. There have been a lot of celebrations the past couple of months. Leading developer, Harry Triguboff had a huge party to celebrate Meriton’s 50th Anniversary. David and Olivera Ferguson from Strata Plus opened a second office in Crows Nest and GK Strata celebrated their 30th birthday. All captured on film and spread across our pages in Around the Traps. In the New Year, Stratalive is going to work more closely with Strata Community Australia (NSW) to help you improve your relationship with your strata manager. We will be setting up a help line for executive committees on www.stratalive.com.au should you require mediation help with your current manager or help appointing a new strata manager. All conversations will be totally confidential and at no cost to the buildings or their strata manager. I would like to take this opportunity to thank everyone for contributing to both the magazine and stratalive.com.au this year. We are growing every day and with the help of strata experts and saavy strata dwellers, we are helping thousands of lot owners across New South Wales. I wish you all a very Merry Christmas, safe holidays and a very Happy New Year. See you next year!

Cindy

Publisher Byline Media Pty Ltd Editor Cindy Martin Production Magazines byDesign Contributors Barry Hyland Front Cover 6/160 Ramsgate Avenue, Bondi Beach – for sale through Bethwyn Richards of McGrath 0410 322 333 and Bob Guth, Bradfield Cleary 0403 585 585 Byline Media Pty Ltd 332 Commercial Road, Vineyard NSW 2765 (02) 9627 1627 E: info@byline.com.au Magazines byDesign Level 4, 33 Lexington Drive, Bella Vista NSW 2153 (02) 8883 5890 E: linda@bydesigngraphics.com.au

StrataLive Summer 2013

5


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PROPOSED STRATA REFORMS - NSW FAIR TRADING

Proposed Strata Reforms Have Been Released

Here is what the industry has to say.

M

inister for Fair Trading Anthony Roberts has released proposed reforms that will improve strata living for millions of people across NSW. Mr Roberts said there are more than 72,000 strata schemes in NSW and an average of five new schemes are registered each day. “It is estimated that by 2030 half of Sydney’s housing stock will be multi-unit dwellings and the proposed reforms will strengthen a culture of community and cooperation in strata,” Mr Roberts said. “They support democratic, accountable and transparent decision-making and empower strata communities to chart their own futures”. Minister Roberts launching the Strata Reform Position Paper.


PROPOSED STRATA REFORMS - NSW FAIR TRADING

A Position Paper: Strata and Community Title Law Reform highlights 70 proposed changes by the NSW Government, including: • Requiring managing agents to disclose at each Annual General Meeting any commissions received in the previous 12 months and to seek approval for those expected during the next year. All non-monetary benefits and gifts from third parties will be banned; • The model by-laws will allow for certain pets and prohibit smoke drift where it causes a nuisance or hazard; • Hardwood floors will need owners corporation approval; • Notice will be required for changes such as refitting a bathroom but approval will not be required for minor cosmetic changes such as painting a wall or inserting a picture hook; • Owners corporations will be able to limit the number of people who occupy lots to prevent overcrowding; • Owners corporations may enter into an arrangement with the local council to issue penalty notices for unauthorised parking; • Tenants will be given the right to attend and participate in owners corporation meetings; • When registering a scheme, unit entitlements must be determined by an independent valuation to provide more transparency and consistency; • The limiting of proxy votes to prevent an individual or group controlling decisions; and • Documents may be issued and meetings held electronically as an alternative method to traditional paperwork processes and meetings. Mr Roberts said the NSW Government will introduce a high rise development bond to protect homeowners against building defects. “The bond will be equivalent of two per cent of the cost of the building work. This will address defective work and give consumers added protection if a developer becomes insolvent. “The bond will be released once an independent defects inspection has been undertaken and any defects have been rectified.” Chief Executive of Urban Taskforce Australia, Chris Johnson, said “An independent assessment of defects by acknowledged experts is a much better way to resolve problems. We are supportive of the retention of some funds to cover the cost of possible defects as determined by the independent expert,” Mr Johnson said. Chair of the Owners Corporation Network, Stephen Goddard, said “Perhaps the most important reform is an attempt to address building defects that affect 80 per cent of all new strata schemes.” Mr Roberts said the Position Paper also outlines a new system for the collective sale of strata schemes. “The State’s strata buildings are ageing and the cost of maintaining them with special levies can be too expensive for some owners. Trying to collectively sell a strata scheme can be a costly and drawn out process which creates conflict and ultimately sees all parties in the Supreme Court. 10 StrataLive Summer 2013


PROPOSED STRATA REFORMS - NSW FAIR TRADING

“To address these issues the Government has developed a new model for the collective sale and renewal of strata schemes where there is less than unanimous support from owners. “The proposed model for the collective sale of strata schemes provides greater fairness, transparency and improves the level of protection for owners. “It will inform and protect owners every step of the way and will help prevent conflicts between owners and third parties,” Mr Roberts said. The proposed threshold required for the collective sale of a strata scheme will be 75 per cent of lot owners, where each lot has one vote. Key features include: • An opt-in provision which means that a general resolution is needed before owners can formally consider a collective sale; • A ‘strata renewal committee’ is appointed by owners to oversee the development of a collective sale/ renewal plan; • A minimum of 60 days for lot owners to consider and seek their own independent advice on the plan; • Oversight of the process by an independent Strata Commissioner at the Land and Environment Court to ensure fairness; and • The Strata Commissioner to consider whether the process has been followed and everyone has been treated fairly.

The Strata Commissioner will seek to resolve any dispute through mediation. If the matter can’t be resolved it will proceed to a hearing. “Our strata buildings are not designed to last 1,000 years so why have a strata system that does. It is contrary to the public interest to have strata titles that do not easily allow urban renewal,” Mr Goddard said. “The proposed changes that set a 75 per cent threshold to finalise a strata title can open up the opportunity to renew areas where 1960s and 1970s apartments were built to much lower standards than those used today,” Mr Johnson said. Strata Community Australia (NSW) President, Greg Haywood, welcomed the release of the Position Paper. “We would like to express our gratitude to the Minister who has at all times ensured that our organisation has been involved in all stages of the consultation process,” Mr Haywood said. “We believe that the time is right for change in the strata industry and that this Position Paper identifies and addresses long held concerns in the sector with a view to changing them for the better.” A copy of the Position Paper is available at: www.fairtrading.nsw.gov.au

(L-R) Suresh Manickam, Executive Officer, Strata Community Australia NSW, Greg Haywood, President Strata Community Australia, NSW, Stephen Goddard Chair of Owners Corporation Network, Karen Stiles Executive Officer Owners Corporation Network, Gerry Chia Secretary Owners Corporation Network StrataLive Summer 2013

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PROPOSED STRATA REFORMS - STRATA COMMUNITY AUSTRALIA

From the industry body’s perspective…

S

trata Community Australia (NSW) have welcomed the release of the NSW Government’s Strata Law Reform Position Paper, which aims to make strata living easier for consumers. In welcoming the release of the paper, SCA (NSW) President Greg Haywood said that the consultation process had been positive and inclusive and he felt the paper reflected the changes needed in NSW strata laws for now and the future. “While we still need to go through the paper fully we are positive about the changes the NSW Government has proposed for the strata sector,” Mr Haywood said.

12 StrataLive Summer 2013

“We believe that these changes will make living and working in the strata sector a more positive experience. We are especially pleased to see the changes to the model by-laws as these are now being written in a way that tells people what they can rather than what they can’t do and this is a great step forward.” Mr Haywood said SCA (NSW) had been involved in the consultation process from the start and then through every step thereafter. He said that the organisation and its members were grateful for the opportunity to help shape the laws that will carry the sector forward.

“We believe that the time is right for change in the strata industry and that this Position Paper identifies and addresses long held concerns in the sector with a view to changing them for the better.” “We welcome continued dialog with the Minister for Fair Trading’s office and Department as we work through all the proposed reforms.”

(NSW)


PROPOSED STRATA REFORMS - GRACE LAWYERS

From the strata lawyer’s perspective… by Colin Grace, Grace Lawyers

O

n Thursday 14 November 2013 the NSW Government’s released the latest “white” paper on the Strata review. This paper is the last step before legislation is drafted for consideration by Parliament and has been hailed as the largest review since the implementation of the Strata Schemes Management Act in 1996. There are 22 suggested amendments to the laws surrounding corporate governance of a strata scheme. The suggestions include easing meeting procedure requirements, dealing with executive committee appointments (and vacancies), conflict of interest provisions, and proxy voting. Most of these matters are procedural and go some way to improving the general running of a strata scheme. Others however are more problematic and may lead to future disharmony in the schemes and potentially the industry: • No minimum number for executive committee membership. • Parking and by-law enforcement issues • Limitations on managing agent contract terms. • Tenancy involvement in meetings. Building and Construction There are 18 reforms to the building and construction legislation that will affect not only new building construction, but remedial works and the termination of a strata scheme (now called collective sales). Whilst some set up new systems and procedures in the main it is our view they do not adequately deal with what is a systemic failure of building (and remedial) construction works. The major changes include:

• Requiring defects to be discussed at every general meeting until all statutory warranty periods have expired (combining both initial warranties and those covered by remedial works in time Owners Corporation’s will effectively have a motion on every general meeting dealing with defects and if they are aware of defects in work (or should be aware of defects) then if they do not take action they may diminish their rights to claim in the future. • Requiring developers of new large buildings to provide a bond which can later be used to pay for defects (after an independent review). Whilst a great initiative the bond will not deal with major structural elements that appear after the bond has been returned (after 2 years). • Terminations (or the “collective sale”) of strata schemes. The limit has been set at 75% in favour and the scheme enters into the collective sale process. • Dealing with owners renovations.

of by-laws to the Owners Corporation and not the Director General. Managing Disputes The management of disputes is an area in need of consideration and in some respects the suggested changes may not adequately reflect what some suggestions that have been raised. Provisions to transfer obligations to the new Tribunal with wider powers to consider matters and make decisions including: • Penalty for non-attendance at mediation. • Increase Tribunal powers over disputes including debt collection and monetary orders. • Removal of right to be legally represented (unless approved by the Tribunal). • More power to Tribunal to deal with dysfunctional schemes.

Budgets and levies These changes deal with further disclosure of information, recovery of levies and some general changes to fund allocations. By-Laws The amendments are to cover an update of the current by-law systems and giving more flexibility to schemes in making and adopting by-laws. Some significant changes are: • Allowing by-laws dealing with abandoned vehicles. • Dealing with wooden floorings and other hard surface floors. • Payments of penalties for breaches StrataLive Summer 2013

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PROPOSED STRATA REFORMS - WADE MCKENZIE

From the strata manager’s perspective... by Wade McKenzie, Strata Republic

I

t’s hard not be excited by the strata law reform, and its a breath of fresh air to see that common sense has finally prevailed in so many important aspects which have been a thorn in the side of the Strata Industry for so many years. The most positive changes from my perspective are those to the flexibility of electronic communication which will improve productivity with decision making, the developer bond which should guarantee prompt and thorough rectification of defects, and the

14 StrataLive Summer 2013

termination of strata scheme changes which will breath new life into the industry. I don’t consider any of the changes to be negative, however it remains to be seen how instances such as conflicted interest, proxy farming and developer influence will be properly policed. The Consumer, Trader & Tenancy Tribunal (CTTT) will certainly have their work cut out for them, with positive new changes concerning pets, smoking and many more issues that will lead to inevitable disputes. The system is flawed

on many levels at present due to time, cost and resource issues to hold people accountable. Lets hope they are prepared. Strata Managers should be aware of a substantial industry overall that will create healthy opportunities and an equal dose of competition, which most importantly, will benefit owners and the industry. I foresee a survival of the fittest evolution over the ensuing years, with many acquisitions of those that are either unable, or unwilling to embrace the changes.


PROPOSED STRATA REFORMS - STRATA CHOICE

From the strata manager’s perspective... by Daniel Linders, Strata Choice

D

aniel Linders, Group Managing Director of Strata Choice, highlights the major proposed changes within the NSW Government Strata & Community Title Law Reform Position Paper. Operation of the Strata Scheme • Increased requirements for record keeping and availability for access by owners • Increased clarification and certainty around common property in regards to repairs and maintenance • Increased disclosure requirements on commissions for strata managers • Simplifying the process for owners who wish to renovate • Improvements in the procedure to remove abandoned goods • Require the developer / builder to prepare a maintenance schedule for the strata scheme • Requirement to set reasonable predicted levies in the initial period Meetings • Alternate methods of attending meetings (video conferencing and the like) • Tenants to be permitted to attend meetings, however cannot vote • Limited proxies to be held by persons to reduce ‘proxy farming’ • Removal of quorums for meetings

Executive Committee • Increased liability protection for executive committee members • The term ‘Executive Committee’ will now be called ‘Strata Committee’ • Tighter disclosures and restrictions

on conflicts of interest for executive committee members • Unlimited number of executive committee members permitted in large schemes By-laws • Guidelines to ensure that by-laws are reasonable and non-discriminatory • Mandate of a regular review of the scheme’s by-laws to ensure they are current and relevant • Tighter controls around installing wooden or hard floors • Relaxed standard pet by-laws to promote the keeping of small dogs, cats, birds and fish • More enforceable, escalating penalties around repeat by-law breach offenders • Penalties for non-compliance of bylaws will be paid to strata schemes • Better dispute management

procedures both within the strata scheme and Tribunal Building Defects • Defects must be discussed at annual general meetings • A defect report must be obtained for the strata scheme (paid by the developer / builder) • A bond must be paid by the developer / builder for rectification of building defects • Removal of the ability for a developer to vote on matters relating to building defects Strata Renewal • Strict guidelines for owners who are thinking of collectively selling their strata scheme for redevelopment • Reduction to the threshold from 100% to 75% vote to initiate a collective sale (1 lot = 1 vote). StrataLive Summer 2013

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PROPOSED STRATA REFORMS - CHU

From the strata insurer’s perspective... by CHU Insurance

T

he potential ban on paying insurance commissions to strata managers sparked a great deal of concern within the strata management industry. So we were very pleased the Government listened to the concerns raised by the relevant industry bodies and stakeholders and the NSW Strata Law Reform Position Paper, released on 14 November, has focused rightly on increased disclosure and transparency around third-party payments. Section 1.15 of the Position Paper proposes a new regime of disclosure, accountability and regular review of commission arrangements. We believe this focus is fitting however, in any of these elements, it will come down to the detailed requirements of commissions and quotes for certain products that will determine whether strata management businesses can remain financially viable under the proposed regime. Looking at the high level proposals we have a few questions and suggestions on how these could be best implemented in practice. Some of our initial comments on the proposals outlined in Section 1.15 are. • Requiring the managing agent to disclose at each AGM the circumstances, dollar amount and services provided in respect of any commissions received during the previous 12 months: Dollar disclosure will assist with transparency and we think this will be instrumental in helping owners understand commission arrangements. We 16 StrataLive Summer 2013

also think it would be helpful for an industry template to be developed to ensure consistency and increase transparency for owners. • Requiring the managing agent to disclose at each AGM a best estimate of the circumstances, dollar amount and services to be provided in respect of any commissions to be received in the next 12 months: More detail is needed to understand what is required for a best estimate as well as the ramifications if the amounts vary through the year. This could just add another layer of red tape to the process and may prove time consuming for the industry. It is also going to be difficult to provide this estimate in relation to insurance as so many factors come into play when determining the premium in future. Factors such as a new building valuation can increase or decrease the building sum insured, claims incurred in the future period for the scheme affecting the claims loss ratio, catastrophes, reinsurance costs (also subject to catastrophes), changes to underwriting guidelines and rating models. These will all be issues that we need to work through. • Requiring the managing agent to disclose at each AGM a fee for service based model (free of commissions), outlining the costs of services to be provided in the next 12 months: Again the detail of what this means will be vital. It may be relevant to show commission vs fees when negotiating the management

agreement or where requested at the AGM so an informed choice can be made. However to provide this annually may be both onerous and of little value if the OC is happy with the commission arrangement. • Requiring Owners Corporations to decide at each AGM whether the managing agent is allowed to receive commissions (including in which circumstances) for the next 12 months: If this was to be enforced, it would be important for the strata management agreement to have provision to adjust fees in


PROPOSED STRATA REFORMS - CHU

place of commission. Often the strata management agreements extend for longer than 12 months so the remunerations arrangements would need to be renegotiated or a mechanism to adjust fees would be needed if a key change like this was to occur. Otherwise this would create problems with contract certainty and would also likely have financial implications for the strata management business. • Requiring the managing agent to get at least three quotes for certain products (for example, insurance) to

ensure competition and choice for the Owners Corporation. The parameters for multiple quotes are not clear. Is the proposal to obtain these yearly or every three years and is the size of the scheme relevant? It is of great concern if the focus becomes purely ‘price’ rather than product cover and consideration of additional risk exposure that changing policies may have for the OC We are pleased with the proposals to see improved transparency in the quote and renewal phase of the insurance

process. We consider it is very important however that insurance information does not get simplified to limits and price, with no account for scope of cover, reputation, insurer credit risk, claims payment track records and so on. The Government’s aim for greater transparency to increase trust between strata managers and the OC is an honourable one. To achieve this aim it will be important to continue to engage with the industry to ensure there is clarity around the requirements and that practical solutions are realised and translated in the new world of strata law. StrataLive Summer 2013

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PROPOSED STRATA REFORMS - KELLY + PARTNERS

From the strata accou by Peter Dawkins - Senior Client Director, Kelly + Partners

W

ith the recent release of the NSW Government’s Strata Law Reform White Paper most of the press focussed around the issues of pets, parking and smoking. Whilst we admit audit isn’t the “sexiest” area of reform the laws do affect a significant number of strata plans in this state. We at Kelly + Partners have been involved within the industry for over 25 years and have been advocates for strengthening the areas of good governance within the industry having been involved in the review debate from the get go. We note this reform has been spearheaded by the Hon. Anthony Roberts MP, Minister for Fair Trading and that his consultative approach to the sector has served this process well. Central to this legislative reform is the social phenomenon of Strata being at the centre of the way in which communities will organise themselves over the decades to come throughout NSW. It is anticipated that over the next 30 years half of the state’s population that is, approximately 3 million people, will reside in strata and community schemes. Social cohesion results from the confidence individuals can place in their institutions and this extends down even to the executive committees who are elected for each strata plan state wide. A revamp of the mandatory audit threshold to ensure improved compliance across this rapidly growing sector of the community makes good policy sense. As we all know, increasingly individuals across NSW are migrating towards these “vertical villages” and away from the single dwelling 1/4 acre block. To date, the legislation had not kept pace with the most profound demographic and social changes to occur in NSW in the post war era. This White Paper takes these

18 StrataLive Summer 2013

new realities into account and seeks to improve, among other significant reforms, the area of good governance. Mandatory Audit Threshold The NSW legislation, as it currently stands, results in only 575 strata plans out of 71,099, i.e. less than 1% of schemes being subject to mandatory audit. (Source: Land & Property Information March 2012). One of the main aims of the reforms is to improve governance through greater transparency and accountability. The proposed laws in this area are listed in the Summary of Reforms contained within the White Paper – Budgets & Levies Reform 3.5 “Provide that schemes with budgets greater than $250,000 must have their accounts audited”. This is an additional threshold to the current laws under which schemes with over 100 lots must have their accounts audited annually. Extrapolating from this, potentially buildings with lot sizes ranging from 50100 may now be subject to the mandatory annual audit obligations. This proposed law may affect 500-1,000 additional plans that were previously not subject to the mandatory audit obligations under the current legislation. We acknowledge the range and complexity of modern strata schemes and note the $250,000 threshold may in fact include plans with lot sizes less than 50 based on usage. We will be seeking further clarification from the government in relation to the method of calculation to be used when determining if a building exceeds the $250,000 threshold. We note the $200,000 Victorian threshold has been replaced with a $250,000 threshold for NSW for reasons that we have yet to fully determine.

What factors have necessitated this change? 1. Under the current regime less than 1% of schemes are required to be audited The legislation required only large schemes (i.e. those with in excess of 100 lots) to be audited. This translated to the mandatory audit of approximately 575 schemes out of a total number of schemes in the vicinity of 71,000. That is, less than 1% of schemes were subject to mandatory audit requirements. For an industry focused on good governance and raising professional standards this represented an extremely low level of independent review. 2. Increasing Complexity & Cash Flows of Developments Many schemes comprise a combination of residential, retail and commercial developments and also offer residents a wider range of facilities (swimming pools, gymnasiums, tennis courts etc.). Many complexes comprise more than one strata or community scheme and often include a building management committee to assist in the management of the complex. Such complexes also include the adoption of a strata management statement, so as to ensure the correct contribution to shared facility expenses between the various schemes comprising the development. This increases the complexity of accounting and the need for careful financial management, cost allocations and budgeting. With the greater provision of facilities the cost of maintenance has risen, hence the necessity to increase levies. Consequently the cash flowing in and out of schemes can be very substantial and often runs into the hundreds of


PROPOSED STRATA REFORMS - KELLY + PARTNERS

ntant’s perspective... thousands and in some cases millions of dollars. This proposed legislation acknowledges this new reality and the level of funds that are now tied up in strata and community schemes. As complexity and expenditure levels increase, independent reviews play a crucial role in the area of good governance. 3. Significant Increase of Investment via Self Managed Super Funds In recent years the Federal Government passed legislation which permits self managed superannuation funds to borrow. This has led to an increase in the investment in strata and community title schemes by self managed superannuation funds. In consideration of the Federal Government’s strict compliance regime regarding self managed superannuation fund investments, we see the audit of strata and community title schemes to be aligned with the Federal Government’s policies and objectives. The new President of SCA (NSW) Greg Haywood commented in relation to the reforms: “We believe that the time is right for change in the strata industry and that this White Paper identifies and addresses long held concerns in the sector with a view to changing them for the better.” We support this statement and look forward to participating in the debate towards improving professionalism and good governance across this vital sector now and into the future. Finally we note the Government is currently drafting a Bill that will give effect to the reforms outlined in their White Paper and are aiming to table the Bill in Parliament sometime in early 2014.

value-added, on time services, nationally to Strata Managers.

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ion and commitment required Clients include strata managers, commercial and orm in this dynamic industry. ata audit team is backed by a vast residential property managers, real estate agencies, tion – income, capital gains, GST. investors, developers, construction companies, s or phone on 02 9923 0800. commercial and residential builders.

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StrataLive Summer 2013

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The people people.


GREG HAYWOOD - PRESIDENT OF STRATA COMMUNITY AUSTRALIA (NSW)

Meet the New President of Strata Community Australia (NSW)

G

reg Haywood, Chief Executive Officer of the largest strata group in Australia, PICA - has been appointed President of Strata Community Australia (NSW). Strata Community Australia is the leading professional body for the strata and community title sector in NSW. Greg’s appointment comes at a time when we will see the biggest changes in

22 StrataLive Summer 2013

strata. As someone who envelops himself in the big picture, Greg’s appointment signals the ongoing commitment by the industry body to unify the whole industry which includes you, as lot owners. As a huge advocate of professionalism in strata, Greg will now represent at the highest level one of the fastest growing industries of the 21st Century. An industry that is being overhauled for the first time

in over 50 years, Greg’s appointment ensures that the future of a new era in strata is in safe hands. Greg is much admired in his role at PICA. Through his generousity of time and his calm influence he appreciates his business is about people and he knows all his people – all 560 of them. “When you run a business that looks after such a broad spectrum of lot


GREG HAYWOOD - PRESIDENT OF STRATA COMMUNITY AUSTRALIA (NSW)

owners, you need to know the people looking after them,” Greg said. “Everyone in our business is equally important because they each hold a valuable position in the company keeping our owners informed and happy,” he said. There is no ivory tower or mahogany row at PICA, Greg rolls his sleeves up and gets involved. Whether he is speaking to the SCA board, his executive team at PICA, his managers or to you - the lot owner, he makes time for everybody. Greg Haywood has your back and that makes him a great leader. Since joining PICA in 2001 as Chief Financial Officer before becoming Chief Executive Officer in 2003, Greg has lead the strong growth of the PICA group to its position today as the market leader in strata. Today, PICA has experts that can manage every aspect of strata including residential, commercial, mixed use, resorts, aged care, company title and community association properties. “Customer service is always first and foremost at all times,” Greg said. “We would like to get it right 100 per cent of the time but you have to accept, albeit begrudingly, that it is not always going to be the case.  Anyone who promises that is unrealistic.  “All we can do is keep striving to be the best and that is through our company’s focus on its staff and systems training and development and we are now at a point we can be proud of the service we deliver.” To get to this point, Greg says that PICA went through various stages of development including putting all senior managers through a leadership program which was aimed at strategically aligning the business to where it wanted to go. Training and development has provided the key professional competencies all staff are required to have to meet the objective of delivering the goal of great customer service.  Greg’s personal drive has been to ensure training and development is open to all as

this is the key to getting the best out of people and retaining good staff. “Giving tools to better leaders in the company encourages people to do greater things as well as building confidence,” Greg said. “A more confident team means they are able to provide good internal and external customer service.” More recently the business has been focussing on the clients needs and engaged a branding company to assist it identify ways to develop client relationships. Greg says this provided PICA with a new model and branding around the purpose of “enhancing community living”. As part of the focus on client needs a client survey was conducted where two key things emerged. These were that clients want leadership from their strata managers and they want quality

trades people to undertake their repairs and maintenance. The focus therefore for PICA could not be simpler. “People make an organisation,” Greg said. “If they are well-trained and have support from their employer they can provide their clients with that leadership and ensure they attract quality suppliers who also share the same vision.” Greg has been an active Director of SCA NSW for the last six years to provide support and direction for the strata industry along with other PICA senior managers as board members in other SCA states. He is very proud of becoming the President of SCA (NSW) and he welcomes the challenge of overseeing this new era in strata management. For more information visit www.nsw. stratacommunity.org.au StrataLive Summer 2013

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JOINING SCA

Joining SCA T

he Minister for Fair Trading, the Honorable Anthony Roberts, MP, recently described strata as the fourth tier of government. Certainly the way it’s structured with a collective of owners (owners corporation) and then a representative committee (executive committee) would make it seem government like. For many however it is the rules and regulations that make it seem as though it could be a tier of government. To help guide you through the maze of rules and regulations and to provide you with support, Strata Community Australia (NSW), the leading professional body for the strata and community title sector in NSW, has established a Strata Owners Chapter. This means anyone who owns a strata titled property is welcome to join SCA (NSW) and immediately be entitled to a variety of member benefits. As some background, SCA (NSW) brings together people who manage strata schemes, own one or more strata lots and businesses who provide

24 StrataLive Summer 2013

goods and services to them. SCA (NSW) provides education, advice, and advocacy to enable better understanding of the regulations, obligations, and the rights of lot owners. Strata Owner Chapter (SOC) The Strata Owner Chapter is a category of membership for people who own one or more lots in a strata or community title scheme. It can especially be beneficial for those who sit on the executive committee of their scheme. Membership of the Chapter has been increasing over the past 12 months as more and more owners realise the benefit from joining an organisation that represents their interests and knows everything about the sector. So what does being a member of the Strata Owners Chapter give you? Well first up there is free online executive committee training. If you’re new to the Executive Committee or an old hand you still might benefit from our free training. All it costs is your time.

(NSW)

Other benefits include: • Invitations to events at special SOC member rates • Networking opportunities with other lot owners, strata managers and strata service providers • ‘Around the Grounds’fortnightly (NSW) e-newsletter from SCA (NSW) • Access to the online directory of suppliers and strata businesses • Access to fact sheets • Police and Advocacy • Education and training at member rates • Awards Recognition • Use of the strata ‘Works Agreement’ template (NSW)(electronic) • Membership certificate • Access to the Code of Ethics • Input into strata policy development • Voting rights (limited) pursuant to the NSW Constitution To join SCA (NSW) simply go to the website www.nsw.stratacommunity. org.au. Alternatively you can call (02) 9492 8200.


THE ROLE OF A STRATA MANAGER

What does my strata manager do? W

hat does my strata manager do? – is a question that a lot of strata managers hear from strata property owners. Here we have produced answers to the most popular questions about the role of the strata manager. Here Strata Community Australia (NSW) has put together a guide which should clear up any misconceptions about what your strata manager is engaged to do. What does a strata manager do? Strata managers are engaged by the owners corporation at the Annual General Meeting to manage the day-to-day affairs of the scheme. Strata schemes are becoming larger and more complex. Strata managers provide services and advice on: • Financial management • Insurance • Clerical and administrative support and follow up • Ad hoc maintenance and contract support • Ensure requirements of the relevant legislation are met • Advise on the legal requirements concerning the operation of the strata scheme. The role varies depending on the size and type of property and involves people management, requires someone who is organised and is able to handle difficult clients from time-to-time.

What is the role of the executive committee? The executive committee is elected at each Annual General Meeting from the pool of strata owners. Their role is to exercise the functions of the owners corporation or body corporate. The executive committee oversees the management role by monitoring the finances and bringing forward matters for discussion. They elect a Chair, Secretary and Treasurer and where the scheme is self-managed they are also responsible for all the tasks which might otherwise be carried out by a strata manager, including being across all legislative requirements. The executive committee must also carry out all decisions made at the AGM. They can’t ignore the strata scheme members nor can they bring in their own agenda. Can I contact my strata manager direct? You can but the strata manager is engaged by the owners corporation and not the individual property owner. If you have an issue that you raise directly with your strata manager they are obliged to pass it on to the executive committee for review. Why does my building need a strata manager? Some don’t need a strata manager. If your property has two or maybe three lots it may be that it can be self-managed. However as the legislative requirements have become more complex as time goes by many have realised they need the help of a strata professional to ensure they are meeting their legal requirements. If they don’t meet their requirements they can end up before the relevant tribunal and may be subject to penalties and orders. Often many owners don’t have the time or expertise to run their strata scheme and the strata manager can help steer the owners on the right track. How do I evaluate my strata manager’s performance? Ask whether your strata manager is providing a proactive service delivery. Are they professional? Do they act in a timely manner? Do they provide the level of care you expected? If the answers are yes and if your strata manager is also SCA (NSW) accredited then you have likely found the right person for your scheme. To find out if your strata manager is accredited go to www. nsw.stratacommunity.org.au StrataLive Summer 2013

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OPINION - STRATA BROKERAGE

Don’t Churn and Burn Writing Cheques a Brokerage Model Can’t Cash By Cindy Martin

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trata…who would have thought this sleeping giant would affect close to half the population of Australia in one form or another. It is now the preferred lifestyle of the 21st Century. When I first started stratalive.com. au it was to build a home for lot owners that they could call their own. I was not expecting the enormity of participation. With over 100,000 members in NSW alone, Stratalive is now the leading strata website in Australia.* This magazine has followed suit. The concept, while simple enough, was costly to execute. And while we have maintained that there is no cost to lot owners, we do depend on the support of our loyal sponsors and advertisers. On a slow day, we probably receive around 500 emails, half of those from owners with concerns about their strata manager, the other half from owners who do not understand the basics of strata at all – or the associated responsibilities performed by their strata manager. The expectation from some lot owners about their strata manager’s involvement in the day-to-day running of their building is both unrealistic and unachievable. The biggest complaint - “For the levies I am paying, I would expect much better.” Your management fee, per lot, per year is a very tiny representation of that levy. And that is what few lot owners tend to understand. Put bluntly, to supply the service that many owners expect and demand, at a minimum, strata managers would need to quadruple their fees. It is that misunderstanding that creates churn in the industry. I have been to buildings where they are looking to change strata managers and

26 StrataLive Summer 2013

I consistently hear the same thing. The expectations are unrealistic and it is always more for less. Most occasions we have talked through the issues and found a solution with the building’s current strata manager. On occasion when issues have been irrevocable, we have assisted in helping with a change of manager. If you compromise the professional running of your building by appointing the cheapest manager, you will pay for that decision tenfold when you sell your apartment. It is as simple as that – you get what you pay for. The maintenance and management of your building should be your priority.

That brings me to the further development of Stratalive. Many of you have contributed to ideas to add to the website so we decided that we would look to investors to expand the site. Aside from the natural progression of going national, we would like to add a search engine for apartments for rent and sale, help you obtain qualified quotes from trades, a training manual for first time lot owners, more education for executive committees and so on. Basically more tools to benefit lot owners. From an investor’s perspective, the website would need to be more commercial and the quickest way to do that is by introducing a brokerage model


OPINION - STRATA BROKERAGE

to the site. There is a product currently in the marketplace that does that so we investigated the option of introducing a competing model. A brokerage model basically helps you change your strata manager at no cost to you. Your hand is held through the process and then the strata manager who wins your business is invoiced a substantial fee. My greatest concern with the current model is that they have very few strata managers participating so buildings are not getting choice across the board. You are choosing from a very small pool and there is no transparency. My moral dilemma, regardless of how you sugarcoat it, is that any model such as this exists to create churn. For a brokerage business, the bottom line far out-weighs the good management of your building. Stratalive is about making strata better for lot owners. Attaching a brokerage model to Stratalive would not be in the best interests of lot owners. Creating churn for the sake of it could be jumping from the frying pan into the fire. That said, we will continue to do what we have always done and help you resolve issues with your current manager – or in the extreme situation that you decide to change strata manager, we will assist you to do that as well. We are going to work closely with the industry body, Strata Community Australia (NSW) to make sure you get the appropriate help through that process. You will not pay for that support and the strata managers will not pay for your business. The process will be totally independent and the choice will be on merit, not on remuneration. We can guarantee you will have a much larger pool of managers and there will be total transparency. This policy position was recently released by Strata Community Australia National Board. The SCA National Board, on the advice of the Policy and Legislation Advisory Group and at the request of SCA (Vic), has formally adopted a position expressing concern at the emergence in the marketplace of companies acting as

strata contract brokerages as a business model. These are businesses that purport to negotiate strata management contracts on behalf of, and free of charge to, owners corporations – in short, acting as ‘contract brokers’. Such ‘contract brokers’ are not to be confused with traditional ‘business brokers’ that act as agents in the sale of portfolios from one strata management company to another and are remunerated by the vendor. ‘Contract brokers’ derive their income from the purchasing strata management company. From information reviewed by SCA the actual amount of income is not fully disclosed to clients. Management companies wishing to have their tender presented to the owners corporation for consideration by the brokerage clients must agree to pay up to two and half times the annual management fee if successful and become bound by the restrictive clauses within the agreement. The owners corporation does not receive any financial gain for the placement of their contract but may well become exposed to increased costs as managers strive to recover the significant purchase expense to

underpin the ongoing viability of their businesses. While possibly appearing enticing at first glance to owners corporations looking to change managers, the devil is in the detail as the tender process is limited to only those firms willing to ‘buy’ business which does nothing to ensure that the ‘most suitable’ manager for the job is actually presented for consideration. SCA therefore has fundamental concerns regarding the transparency, disclosure and ethics of this process and is of the view that the best interests of owners corporations, consumers and the industry may not be inherently supported or protected by strata brokerage-type arrangements. If you have any concerns about your relationship with your current strata manager, send an email to mymanager@ byline.com.au so we can assist you moving forward. All correspondence will be treated with total confidentiality. For general assistance with all strata issues, visit www.stratalive.com.au

*According to website information company, Alexa.com StrataLive Summer 2013

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A CAREER IN STRATA

Want a Career in Strata BCS encourages school leavers to consider a career as a strata manager.

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chool leavers who haven’t quite made up their minds about their future careers are being encouraged by BCS Strata Management, a market leader in strata and community title management in Australia, to consider a career as a strata manager. BCS CEO Greg Haywood said strata management was not really considered a career option by school leavers or people considering a career change. “We’d like one day to hear people say I wanted to be a strata manager when I grew up and here I am.  The role involves such a variety of day-to-day tasks that it’s impossible to suffer from ‘Groundhog Day’,” he said. “School leavers who have had some experience with customer service by working in hospitality or retail while still at school are ideal candidates for a career in strata as usually they already have customer service and people skills.” The strata industry is always looking for new and enthusiastic people to train as strata managers and can offer a career path depending on the goals of the individual. “Some may want to work for a company and can do very well, while others may eventually want to start their own business.  The sector is such that it is possible to do either and be very successful,” Mr Haywood explained. Recently new training courses, including a Diploma in Management (Strata), Diploma in Management (Finance), and Diploma in Management (Business) had been piloted by BCS to help staff advance their careers.  Workplace surveys of employees continually show that education and career pathways are factors in keeping employees engaged. “The new Diploma in Management (Strata) course developed by our HR department headed by Michelle Cummins, General Manager Human Resources, was very successful and we’d like to see this course offered more broadly – so watch this space,” Mr Haywood said. “BCS also offers its own course for staff such as a Certificate IV in Customer Service and one in Business Administration.  Managers and support staff are encouraged to undertake further training and we are happy to provide access for them.” In NSW the minimum qualifications required to be a strata manager are those that have completed a Certificate of Registration and registration with the NSW Office of Fair Trading.  Strata Managers are also required to complete continuing professional development training annually. Certificate of Registration courses are offered by Strata

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Community Australia (NSW). Visit www.nsw.stratacommunity.org.au for more information. This story was supplied by BCS Strata Management


NEW STRATA LAW - GRACE LAWYERS

Three Red Judges Ma SP 61288 v Brookfield/Multiplex

Imagine This Happened You are a member of a commercial strata block of serviced apartments. The external render to the building was made of poor materials and was cracking at numerous locations. The render fell off the building and struck a visitor who was standing below your strata unit. The visitor sued both the Owners Corporation and the builder for negligence, the Owners Corporation for negligently maintaining the building and the builder for negligently building it. The victim could recover against the Owners Corporation and the builder for personal injury due to negligence. You would consider that to be quite right and a just result for the victim. But Consider This You may be surprised to know that as the law has stood for commercial strata units and strata units outside the home owner’s warranty, part 2C of the Home Building Act, 1989 (NSW), that the Owners Corporation could not recover the costs from the builder for remedial action to remove the risk or prevent the injury! You may even think that the law is an ass when it allows recovery against the Owners Corporation and the builder for personal injury, but does not allow the Owners Corporation to recover from the builder the costs of solving the problem! Fortunately in this particular case, the masonry render did not fall, but it is faulty. Unfortunately this is the legal problem because up to this point the law has made a distinction between personal injury due to negligent building and building defects which is recoverable as against repairing the defects which is not recoverable unless covered by 30 StrataLive Summer 2013

home owner’s statutory warranty or a contract with the builder. Builder’s Duty of Care Now Extends to Owners Corporation outside the Home Owner’s Warranty or Statutory Regime On 25 September 2013 in a landmark judgment which creates new law for New South Wales and now potentially Australia, three Justices of Appeal of the Supreme Court of New South Wales (the last step to the High Court) have held in a unanimous decision (3 nil) that the builder’s common law or general law duty of care now extends to a duty to exercise reasonable care in the construction of the building to avoid causing financial loss or expense resulting from latent defects in the building’s common property provided that those defects: • Were structural, or • Constituted a danger to persons or property in or in the vicinity of the apartments, or • Made the apartments unable to be lived in. The extended liability of builders in negligence does not include for minor defects or trivial, aesthetic matters. Interesting Facts of the Case The appeal case was conducted by Grace Lawyers of Sydney, Brisbane and Melbourne. Grace Lawyers acted for the winning appellants the Owners of Strata Plan 61288 v Brookfield Australia Investments Limited (formerly Multiplex Constructions Pty Ltd). The strata complex is a 22 storey building called “Chelsea Apartments” at 10-18 Railway Street, Chatswood on Sydney’s North Shore and cost $55million to build. The building is a mixture of retail, restaurant, residential and serviced apartments.

The top half was privately owned strata units and the bottom half was strata serviced apartments. Because of the mixed development, the top half of the building had the benefit of home owner’s warranty against building defects under the New South Wales Home Building Act Amendments of 1997 for private dwellings. Unfortunately, because the bottom half of the same building was for commercial use as serviced apartments, the strata owners of the serviced apartments did not have the benefit of home owner’s warranty statutory protection. This is an anomaly created by Parliament. The legal issue for the NSW Court of Appeal was whether or not a separate common law right existed against the builder for defects outside of a contractual relationship or a statutory right. Common law (general law) is judge-made law which has existed from time immemorial in the common law legal system. It is based on custom. So, did the builder owe the Owners Corporation a duty of care in negligence? The Builder’s Argument Brookfield/Multiplex argued that there was no common law duty of care owed by the builder to the Owners Corporation for building defects outside a specific contractual or statutory obligation. In delivering its judgment the NSW Supreme Court of Appeal considered and applied common law principles from High Court of Australia decisions, the Supreme Court of Canada, New Zealand, the Privy Council (United Kingdom), and Court of Appeal of Singapore. The NSW Court of Appeal also spoke approvingly in its decision of Victorian state Court of Appeal decisions for example making a


NEW STRATA LAW - GRACE LAWYERS

ke New Strata Law civil engineer and a surveyor liable for pure economic loss under common law principles of negligence and breach of duty of care rather than in contract law which depends on a direct relationship in writing. Because the Owners Corporation had come into existence after the building had been constructed, there was not a direct contractual relationship with the builder and hence, the builder argued, no liability to the lot owners who came later. The respondent builder argued that it was not liable to fix its building defects because Parliament in creating a specific home owners’ warranty regime for domestic premises under the Home Building Act intended to exclude properties used for commercial use such as the serviced strata apartments. Brookfield/Multiplex argued that because Parliament had set out a statutory private home owner’s warranty and did not allow the warranty against defects to extend to commercial strata, then Parliament had made clear its intention that there was to be no general law remedy against a builder for poor construction and building defects. The builder argued that there was an implied Parliamentary prohibition on the commercial owners having any remedy for defects. The unanimous decision of the NSW Court of Appeal was that the builder’s proposition was wrong and that a builder owed a general duty of care in negligence to the Owners Corporation for the rectification costs independent of any statutory or contractual obligation imposed on the builder. This is new law as of 25 September 2013. The Owners Corporation’s Arguments The winning appellant Owners Corporation argued on numerous grounds.

a.  That there was a separate existing body of common law which had already established that a duty of care was owed by a builder to subsequent successors in title for economic loss caused by the builder’s defective building works. This was because the Owners Corporation and the individual owners of the strata serviced apartments were a limited group of people within the contemplation of a reasonable builder even though the builder did not have a specific direct contractual relationship with them nor owe them a statutory duty. Still a common law duty imposed by the courts existed. b. The home owner’s warranty legislation did not seek to override private rights in the tort (legal wrong) of negligence and the establishment of a duty of care from the builder to the Owners Corporation and unit holders. For Parliament to abolish citizen’s rights, there had to be a clear statement in the legislation and there was none. Moreover the wording of the home owners’ warranty legislation presupposed the existence of the common law rights of the lot owners and the statutory regime sought simply to clarify and extend those rights in specific purposes and not to get rid of any other rights which owners have separately against the builder to make good shoddy work and pay for the builder’s damages. c.  The Owners Corporation and the unit owners were “vulnerable” in their position as against the builder. This is the most important consideration in the Court’s decision. It is the vulnerability of the owners, even commercial owners as against the builder which creates in the builder a common law obligation, a duty of care, to protect the Owners Corporation and be responsible to the Owners Corporation for significant building defects.

The Court of Appeal applied a High Court case Bryan v Maloney (1995) 182 CLR 609 and said that the builder Brookfield owed a duty of care to the strata plan and had to be responsible for the economic cost to the strata plan of making good and rectifying the latent building defects where those defects risked injury to people or made the premises unable to be lived in. The decision is limited to significant safety problems and problems making the premises unable to be lived in e.g. water leaks and percolation through a premises. The three Justices considered that an Owners Corporation was in a practical sense vulnerable because of the lot owners’ collective inability to: • Control or influence the physical events such as the building works which gave rise to the loss; • Negotiate a contractual arrangement imposing liability on the builder (because the individual lot owners and Owners Corporation did not exist when the builder was building the premises); and • Insure against the repair costs suffered. Further, the builder took upon itself the building of a safe, habitable and sturdy building and was in the particular position to exercise its skill and care and the owners corporation was reliant on Brookfield/Multiplex’s integrity in avoiding latent building defects and building well. An Appeal from Here The success of the Owners Corporation for the Chelsea Serviced Apartments is a big deal and created legal news. The losing builder, Brookfield /Multiplex has now appealed to the High Court of Australia. That appeal will likely be heard in the first half of 2014. You should “watch this space”. Grace Lawyers is the instructing lawyer for the Owners Corporation in answer to the appeal now brought in the High Court of Australia. StrataLive Summer 2013

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AROUND THE TRAPS - MERITON CELEBRATES 50 YEARS

Meriton Celebrates 50 years

Sydney Opera House fireworks

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Harry Triguboff and wife Rhonda 34 StrataLive Summer 2013

eriton Group and its founder, property entrepreneur Harry Triguboff, celebrated 50 years of the renowned development group with a magnificent party for more than 300 associates, friends and family at the Overseas Passenger Terminal at Circular Quay. Emceed by popular television personality David Koch, the evening featured live musical performances from jazz musician James Morrison and soul singer Jade McRae, and was capped off by a spectacular display of fireworks on Sydney Harbour. Guests dined on a sumptuous menu by caterers-to-thestars Cook & Waiter and sipped Bellinis, top-shelf Scotch and cocktails against the dramatic backdrop of the Sydney Opera House by night.

In attendance were former NSW premier Nick Greiner, Lord Mayor of Sydney Clover Moore, ANZ chairman John Morschel, notable state politicians, business leaders, local mayors and councillors. Speeches by Meriton general manager Peter Spira, Harry Triguboff and veteran journalist Rob Harley reflected on Meriton’s humble beginnings in 1963, when Triguboff built his first, modest apartment block in the Sydney suburb of Tempe. Some 60,000 residential and serviced apartments later (about one in 10 of Sydney’s apartments was built by Meriton), the company’s contribution to Australia’s urban growth is written large along the skyline of the east coast – and there is no doubt in anyone’s minds that much more is still to come.


AROUND THE TRAPS - MERITON CELEBRATES 50 YEARS

Lord Mayor Clover Moore & her husband Peter

Anna Lampropoulos and Kathy Giannakopoulos

MC David Koch & Warren Reynolds

Meriton national sales director James Sialepis & wife Despina

James Morrison

Jade McRae

Eunice Arden-Wood, Suzie Spira and Gold Coast city councillor Dawn Crichlow OAM

Meriton general manager Peter Spira and his wife Suzie

Miki Hendler and Shani Ossadon

Rima and Milad Nasr Charles Mosher & daughter Louise StrataLive Summer 2013

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AROUND THE TRAPS - GRAND OPENING STRATA PLUS NORTHSIDE

Grand Opening

Strata Plus Northside T

he directors of Strata Plus, David and Olivera Ferguson, together with their family, were proud to have Strata Plus Northside officially opened on Thursday 17 October by the Honourable Anthony Roberts MP, Minister for Fair Trading. “Having a presence on the North Shore means that Strata Plus is now delivering the long sought after local service to our valued Northside cleints,� Olivera Ferguson said. Strata Plus commenced operations in 2001. With a proven track record, their growth comes from the personal approach that their professional and conscientious team of 30 offer. Northside is the first of the satellite offices with branch manager, Jodie Smithson lending her seven years of strata experience to this extension of the business.

36 StrataLive Summer 2013

Fair Trading Minister Anthony Roberts and the Ferguson Clan


AROUND THE TRAPS - GRAND OPENING STRATA PLUS NORTHSIDE

Left to Right - Fair Trading Minister - Anthony Roberts, Jodie Smithson, David Ferguson and Levi Arapetta

StrataLive Summer 2013

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OVERHEAD AROUND THE TRAPS - GK STRATA CELEBRATES 30 YEARS

GK Strata celebrates O

n Thursday, 31 October 2013, GK Strata Management celebrated their 30th Birthday at the Crystal Bar at the GPO in Martin Place. GK Strata was originally established by George and Kay Terry with a small portfolio managed from their home. Their son David remains in the business today as a director and licensee-in-charge. GK Strata now manages almost 450 strata schemes and employs 29 staff. With David, GK Strata’s managing director, Melissa Truscott hosted the evening surrounded by family, friends, staff and loyal GK Strata suppliers.

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AROUND THE TRAPS - GK STRATA CELEBRATES 30 YEARS

30 years

StrataLive Summer 2013

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STRATA IN CONVERSATION - NEXT GENERATION

Generation Next Three of our brightest minds discuss the future of the strata industry . . .

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t the fourth and final Strata in Conversation luncheon, Brett Kelly, Managing Director of the chartered accounting firm Kelly+Partners, quizzed Chris Duggan, New Business Director of Bright & Duggan, and Daniel Linders, Group Managing Director of Strata Choice, about the evolution of strata and what the future holds. Stratalive was there, scribbling away furiously to provide this illuminating, albeit edited, version of their lively discussion: Technology BK: The internet is radically changing most businesses. How is E-technology changing the strata industry? CD: It’s interesting because everyone looks at the younger generation and thinks we are going to be more astute about E-strategies and the like. That’s a fairly naïve assumption because the uptake of technology across both our customer base and also our employees and people in business

Chris Duggan (left) and Daniel Linders

is fairly universal. There is obviously a desire for the younger generations to almost exclusively correspond via E-communications and I think what we will see next year, as has been flagged by the state government, is a facilitation of much more E-communications. Whether that be online representation at meetings or the delivery of documentation through the mediums. And what it’s going to mean is a very quick catch up period because I

don’t think companies have appropriately invested in the infrastructure behind being able to appropriately push information out in a timely and expected manner to our customers. Consumers will be able to compare the technological performance of their strata company with that of their bank, and regular activities such as booking a hotel. The E-communications side of the strata industry at the moment is sorely lacking due to lack of innovation

Strata audit Specialists

40 StrataLive Summer 2013


STRATA IN CONVERSATION - NEXT GENERATION

Strata in Conversation

and lack of investment. But we are seeing companies changing. Many have an extensive E-collaboration strategy to try and get ahead of that game. Embracing technology will certainly become very important as the expectation from our customers grow. DL: So true. Take correspondence to our lot owners, as an example. An annual general meeting package can run to 40 pages. So, firstly, you have got to get that into someone’s mail box successfully without it being rejected. And then you have to get owners to come along to the meetings. So you have got to have people savvy on using IPads or any other type of means to scribble on them, write notes on them etc. It’s not just getting the technology right and getting the information out there; it’s also the useability sense. I have just started

using my iPad in meetings, and it’s tough getting used to it. Handwriting is much quicker, and much easier. So maybe it’s not so much the industry getting ready for technology it’s the rest of the world as well. BK: Technology is great for things like online surveys, and links where people can go and self-serve. But the banking analogy is probably a good place to look in terms of how customers have changed over time. Social media BK: To what extent do you think social media is being embraced across the strata industry, and is it making a significant impact for managers or lot owners? DL: I don’t actually have an example of a property that uses social media well.

We know of a couple of properties that have Facebook pages to communicate to customers, and they do that successfully. Nothing too great. But we toyed with the idea of having some type of noticeboard or feed or something on our website so owners could come on and keep in communication. The hurdle that we reached was that, if you use another medium like Facebook, you have their privacy policies and their risk policies relating to defamation. When you start to bring that in house, all of a sudden you become the publisher and you have issues over that. So you get the moderation advantages, having your own proprietary software, except for Facebook. But with Facebook you get the useability protection. CD: We deal with a number of buildings with Facebook or with other building management software which, with or without a building manager, gives them access to a number of communication portals. Almost exclusively they have been driven by a ‘champion’ on the building, and I think it’s important that as strata managers we don’t become the web masters and the software integrators of all of those buildings. So it’s a very fine line between what buildings want and the actual practical implementation of someone moderating these forums. BK: One of the interesting things I’ve heard is that the fastest growing group

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STRATA IN CONVERSATION - NEXT GENERATION

Brett Kelly poses the questions

of users of Facebook is people over 50. So the assumption that Facebook is the domain of 20 year olds is misguided. There are 900 million, or more, people using Facebook. Cloud-based management systems BK: What is your view of cloud based applications, and how might they change the strata business? DL: I think it’s a broader issue than just for our industry; it’s how cloud is affecting the world. One area where we have seen it impact is small start-ups. It’s much cheaper to get online quickly. They don’t have to buy servers and infrastructure anymore. They can make application to Microsoft; I think it costs $12 per month to have their suite of products and you can get online. A couple of data software companies now provide that cloud base as well. So, basically, you just need an internet connection and you are online and ready to go. CD: I think our industry used to be the domain of those who invested 42 StrataLive Summer 2013

quite heavily in their software packages where they could provide more bolt-on functionality. But now with cloud based application you get a comparative service accessible anywhere in the world, managed remotely, providing the consumers with the same suite of products. So it changes the landscape of what competition is and how dynamic companies can be. Cloud application will reduce the cost pressures on businesses, and obviously the lighter and more nimble you can be the more effectively you can compete. BK: Can you see offshore strata managers working, using cloud based systems from overseas locations; the old call centre approach? CD: I think so long as you have state-based licensing regimes and the Property, Stock and Business Agents Act you are still going to have to have an onshore presence. But we will see more back-of-house, more resourcing, more outsourcing - particularly as the industry continues to face increasing costs

pressures. You will have to be looking at all of these options. Inter-generational changes and challenges BK: Over the past 30 years the strata management business has shifted from cottage industry to a profession, and there is a changing of the guard currently underway in many respects from baby boomers to the ‘next generation’. Do you see significant differences between the management style of the older generation and of the newer generation? CD: I don’t think it’s management style; I think it’s the horizon with which you are looking at managing your business. When you get different generations you get inter-generational tensions, whether they be within a business or within the industry. People take differing views of where the industry is going, and where revenue is coming from. They are viewing it through the prism of where they are at within their particular business cycle. DL: Agreed. Older generations,


STRATA IN CONVERSATION - NEXT GENERATION

say baby boomers, may be at middle or tail end of their careers. They may be a little bit more adverse to debt, or additional risk, or making some major acquisition that could give them a high level of risk when they are tapering to exit the industry or hand the business on to somebody else. Whereas this is not so much the case for new generations. Both Chris and I come from a family business. Our industry is unusual in the sense that it has such a high number of inter-generational parties and influences, whether they are active participants or external interested parties. BK: So what are the challenges for a family business? DL: I think succession. It’s something that you should take quite seriously and you should have well documented. It makes everybody a lot clearer and able to be ‘on the same page’. The major thing for our company and me personally would be the different levels of risk one is open to take at certain periods of time because people are in different places in their lives. We have regular meetings in a proper format and plans that look years ahead. And, also, exit and financial responsibility. Everything is agreed and documented. It’s important to get an independent person such as an accountant to prepare these documents. CD: Yes. It’s about making sure you have that discussion about time lines and horizons. Gain any stakeholder input because there are a number of factors of influence, apart from the people involved and what they may want to do. There are other family issues; there are other stakeholders within businesses. I think it’s vitally important that everyone understands and, as Daniel said, documents plans so that there are no surprises around a transitioning. That’s not to say that those plans can’t change, and often they do due to extraneous circumstances. As long as you have a ‘backbone’ or an understanding of how it is to work. I do think what we are going to see more topically will be tension between who has a different appetite for debt, for example, and who has a longer term horizon? That’s certainly going to create a need for the documentation of those

Everyone catching up before lunch at Aria Restaurant

strategies so that when opportunities arise you can act nimbly. Without those documented regimes you are likely to be caught out and have to make decisions on the run which, inevitably, don’t work out. BK: We deal with a lot of private businesses and very few have a written succession plan. In fact, many don’t have a succession plan at all. Most people think about their retirement when they reach 64, literally. But you can’t maximise the value of your business, nor the strategic options, if you are trying to do it on the hop. It generally takes about two years to effectively sell a business.

Love thy neighbour BK: Love thy neighbour has been a key tenant of our society. But back when that was written no one was living in strata communities. What are some of the key issues arising in strata communities due to different age demographics living together? CD: I think you need to change “love thy neighbour” to just “respect thy neighbour”. It’s naïve to think that people are all going to love each other, and I think that mindset usually causes a lot of tension because it presupposes that you are all going to agree on something. But if you have the core tenant of respect within a building and you respect the other person’s view, while you may respectfully disagree certainly it goes a long way to dealing with the issues. But that inter-generational conflict . . . we see it every day. You take any standard strata

scheme in Sydney and you get people with different horizons around their financial outcomes. Younger generations who want to more immediately come in, make renovations to their property sometimes they don’t comply with the by-laws – to capitalise on their investment and then move on. Then you have older people who take a longer term view of their asset. So those tensions exist every day. If you have that core tenant of respect you can deal with a lot of issues. But I think we are going to see increasingly that the inter-generational conflict is something that requires strata management involvement as part of broader mediation services to hopefully deliver outcomes that are acceptable. Age specific communities? DL: I think this is a dangerous proposition. When you put people together from the same economic class or the same sex or the same age bracket it leads them into a place where you get the group mentality thing happening. When you have a mixture of demographics it broadens opinions and tempers down conflict. Let’s use an example of schoolies. When they all get into an apartment building it’s a disaster. So you wouldn’t want to have that in a strata scheme. Going to the other end of the scale with more mature aged tenants or owner occupiers... now that could be a good thing if the facilities and the building has been created to serve that purpose. Certainly some developments are doing this. But I still believe you need a bit of mixture in each property. StrataLive Summer 2013

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Our Strata ServiceS cOme with a Big PluS

Peace of Mind

When your strata management is looked after by professionals from Raine & Horne Strata, you can be sure that all your strata needs will be handled in the most professional and efficient manner. With various types of properties in our portfolio, Raine & Horne has the experience and expertise to offer practical services to your strata issues and ensure smooth processes at all times.

Strata Sydney www.bcms.com.au Level 2, 51 Rawson Street, Epping NSW 2121 Phone: 1300 185 458 Email: sales@bcms.com.au


Strata 101 1. 2. 3. 4.

Strata Managing Agents Caretakers and Building Managers Common Property Insurance


LESSON 1

Strata Managing Agents T

he owners corporation can engage a strata managing agent to work on behalf of all owners to help manage the scheme. The owners corporation enters into an agreement (contract) with the agent, which outlines their duties and responsibilities. The owners corporation has the power to instruct the agent to do certain works and if necessary, they can overrule the agent. Appointing a managing agent The appointment of a managing agent can only be decided by a majority vote at a general meeting. Only a person who holds a strata managing agent’s licence under the Property Stock and Business Agents Act 2002 can be appointed. The length of the appointment should be negotiated by the owners corporation and the managing agent. What are the responsibilities of a managing agent? Agents carry out some or all of the functions, duties or powers of the owners corporation including administrative matters such as calling meetings and collecting levies. They should also provide advice and guidance about legislative requirements. A managing agent cannot be given the power to: • delegate their powers, authorities, duties or functions to others • make a decision on a restricted matter (a matter that needs a special or unanimous resolution or is one which the owners corporation has decided must go to a general meeting) • set levies. A managing agent must write to the owners corporation and outline the duties they are doing and how they are doing them. They must give details of trust accounts and financial transactions when asked in writing by the owners A managing agent cannot transfer the 46 StrataLive Summer 2013

management of the scheme to another strata management business without the approval of the owners corporation. The owners corporation and its executive committee can still carry out its duties even if it has delegated them to a managing agent. Use of proxy vote A managing agent cannot act as a proxy for an owner in votes that would result in their financial or material benefit. Dismissing a managing agent A managing agent can only be dismissed, or have a delegation changed, by a majority vote at a general meeting. The managing agent’s agreement should also be checked as termination conditions, including payments, will be detailed in it. Written notice of the decision must be given to the agent. If the agent is in possession of the books and records of the owners corporation, then these should be returned to a designated member of the executive committee within 7 days of the written notice of termination.

Compulsory managing agent If a strata scheme is dysfunctional an owner can apply to the Consumer, Trader and Tenancy Tribunal for an Adjudicator to appoint a managing agent to carry out: • all the functions of an owners corporation • all the functions of the executive committee and/or the chairperson, secretary or treasurer • only some of those functions. If an Adjudicator decides the owners corporation is not doing its work satisfactorily, or has failed to comply with an order, failed to perform one or more of its duties or owes a judgement debt, the Adjudicator may appoint a managing agent compulsorily. Information supplied by NSW Fair Trading – www.fairtrading.nsw.gov.au


LESSON 2

Caretakers and Building Managers C aretakers can also operate as letting agents within the building and are often referred to as the building manager. They can assist the owners corporation in: • the management of common property • controlling the use of common property by tradespersons and other non-residents • the maintenance and repair of common property. Caretakers may not enforce by-laws or carry out other similar functions of the owners corporation.  A person is not classified as a ‘caretaker’ if they carry out the duties of a caretaker on a voluntary or casual basis or as a member of the executive committee. Caretaker Agreements A caretaker must be appointed in writing under a caretaker agreement (contract), which can be entered into before or after the strata scheme commenced. A caretaker agreement between the original owner and the caretaker entered into during the initial period, ends at the conclusion of the first annual general meeting. The agenda for the first annual general meeting of an owners corporation must include an item to decide whether to appoint a caretaker and if appoint what functions the caretaker should exercise. A caretaker agreement can be transferred to another person with the consent of the owners corporation concerned. From 10 February 2003, the Act limits the period of a caretaker agreement to 10 years, but it may be renewed if the parties agree.  An agreement entered into before 10 February 2003 that is for moer than 10 years can run its full term.

Resolving disputes with caretakers The Consumer, Trader and Tenancy Tribunal (CTTT) provides a quick, low cost dispute resolution service for strata schemes. Disputes about caretaker agreements can be resolved at a CTTT hearing if they have not been resolved earlier at mediation. Only an owners corporation can apply to the CTTT for an order to resolve a dispute with a caretaker. The following grounds apply: • the unsatisfactory caretaker’s performance under the agreement • unfairness of charges paid • the agreement is harsh, oppressive, unconscionable or unreasonable. The CTTT can make an order to: • terminate an agreement • require payment of compensation by a party to the agreement • change, confirm or declare invalid the terms and conditions of the agreement • dismiss the application.

How to find information about caretaker agreements Documents made available by the owners corporation for inspection under section 108 of the Act, must include a copy of any caretaker agreement entered into or in force. Under section 109 of the Act, the certificate provided by the owners corporation has to include the name and address of the caretaker. Use of proxy vote A caretaker cannot act as a proxy for an owner if the voting would result in their financial or material benefit for example, to extend their appointment, to increase their pay, or in a decision not to proceed with or to delay legal proceedings involving the proxy holder.

Information supplied by NSW Fair Trading – www.fairtrading.nsw.gov.au


LESSON 3

What is common property?

C

ommon property is all the areas of the land and building not included in any lot. It is jointly owned by all owners, and the owners corporation is responsible for its management. The lot and common property will be defined on your individual strata plan. However, common property boundaries of each lot are generally formed by: • the upper surface of the floor (but not including carpet) • the under surface of the ceiling • all external or boundary walls (including doors and windows).

Generally common property includes: • floors including a ramp or stairway • boundary walls including any door, window or other structure within the wall and their working parts • ceramic tiles originally attached to a common property surface (eg. the floor or boundary wall) • pipes in the common property or servicing more than one lot • electrical wiring in the common property or servicing more than one lot • parquet and floor boards originally installed • vermiculite ceilings, plaster ceilings and cornices • magnesite finishes on the floor • balcony walls and doors are usually

common property if the strata plan was registered after 1 July 1974 (you must look at the registered strata plan) • the slab dividing two storeys of the same lot, or one storey from an open space roof area or garden areas of a lot (eg. a townhouse or villa), is usually common property if the strata plan was registered after 1 July 1974, unless the registered strata plan says it is not. In addition structural cubic space is usually common property unless the registered strata plan shows that it forms part of the lot. Structural cubic space includes: • any pipes, wires, cables or ducts that are not for the enjoyment of a single lot • any cubic space enclosed by a structure enclosing any of these pipes, wires, cables or ducts. Boundaries If you are unclear about which parts of your unit are your individual ‘lot’ and which parts are common property, check on the strata plan. The common property boundaries are usually shown on strata plans by thick black lines. Sometimes it may be necessary to refer to the registered strata plan if the boundaries between common property and lots in a strata scheme are unclear. To obtain a copy of the registered strata plan of your scheme,


LESSON 3 contact Land and Property Information NSW (LPI) at www.lpi.nsw.gov.au or call 1300 052 637. Care of the common property The owners corporation is responsible for the ongoing maintenance of common property (unless it decides by special resolution that it is inappropriate for a particular item and its decision will not affect the safety or appearance of the strata scheme). This includes repair work and replacing and renewing common property when needed .In

order to pay for maintenance of common property, the owners corporation has to raise funds from all individual lot owners through regular payments of levies (an amount of money decided by the owners corporation). Alterations to common property by an individual owner If an individual owner wants to alter or renovate any part of the common property they will also need the permission of the owners corporation. The owners corporation can decide, by

Insurance

special resolution at a general meeting, to pass an exclusive use by-law which gives the owner the use (not ownership) of that area of common property and makes that owner responsible for the repair and maintenance of the are. If they fail to pass such a by-law, the owners corporation will remain responsible for that part of the common property. An exclusive use by-law must be registered with LPI within two years. Information supplied by NSW Fair Trading – www.fairtrading.nsw.gov.au

LESSON 4

T

he owners corporation is responsible for making sure all necessary insurance policies are in place and are up to date. All insurance policies must be with an approved insurer. Building Insurance The owners corporation must make sure the building is insured under a damage policy with an approved insurer. Schemes with just two lots are exempt if the owners corporation decides by unanimous resolution not to take out insurance, but only if there are no common property buildings, that is, the buildings are wholly within their lots. It is then up to the individual owners to obtain their own insurances. The policy must cover the building if damaged or destroyed by fire, lightning, explosion or any other cause identified in the policy: • for the replacement (where destroyed) or the reinstatement (where damaged but not destroyed) of the building back to the same condition it was in when new • for the payment for removal of debris and the payment of architects and others whose services are needed for the replacement or reinstatement. The building includes owners’ fixtures and fittings. Fixtures and fittings

are items like sinks, shower screens, cupboards, internal doors, stoves, common air conditioning systems and intercom systems. The building must be valued every 5 years and insured for at least that value. Public liability insurance The owners corporation must make sure there is insurance cover with an approved insurer for damage to property, death or injury for which the owners corporation could become responsible. The minimum amount of cover is $10 million. Workers compensation insurance The owners corporation must have workers compensation insurance, with an approved insurer, where it is required

under the Workers Compensation Act 1987.Further information is available from WorkCover NSW, www.workcover. nsw.gov.au or call 13 10 50. Voluntary workers insurance The owners corporation must make sure there is insurance cover, with an approved insurer, against any damage that it may become liable for when a person does voluntary work for the owners corporation in the building or on the common property. A voluntary worker is any person who does work without any fee or reward, or without expecting any fee or reward. Information supplied by NSW Fairtrading – www.fairtrading.nsw.gov.au StrataLive Summer 2013

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STEPS TO MEDIATION

Steps to Mediation Pointing you in the right direction

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t’s a fact of life that we are not all going to get along and sometimes we will need a third party to come in and resolve a dispute for us. Community living unfortunately has more than its fair share of disputes as people either don’t understand their obligations or they decide to ignore the rules. With the help of NSW Fair Trading and Angela Carruthers from Robinsons Strata Management find your steps to mediation. First you will hear from Angela Carruthers from Robinson Strata Management and then NSW Fair Trading will answer some frequently asked questions.

Q A

At what point in a dispute do you realise that you’re going to need to escalate it?

Firstly, we need to be clear that strata managers don’t escalate disputes. The dispute resolution process is clearly outlined by the NSW Department of Fair Trading on the correct procedure to follow before putting in an order for mediation. Generally once a complaint is received about a breach of by-law or a section of NSW Strata Schemes Management Act we issue a letter to the resident of the unit. If that person is a tenant, a copy will go to the owners/property manager as well. If they continue to breach then further letters will be sent and if after approximately three warning letters, the next stage would be issuing a Notice to Comply and this has to be approved at a meeting of the executive committee. If they

54 StrataLive Summer 2013

breach again within 12 months of receiving the Notice to Comply then another order can be issued but again it has to be approved at a meeting of the executive committee. Once the second order is issued it goes to mediation. It is up to the executive committee to advise on who attends that mediation session.

Q A

Do you go straight to a mediator every time or do you file the matter with the Consumer, Trader and Tenancy Tribunal (CTTT) and then it goes to mediation?

The matter must go to mediation before going to the CTTT. However one or both parties may not wish to attend. At that stage a decision would be made for the order to be taken out for a fine or the CTTT may wish the matter to be heard at adjudication when the adjudicator would make a decision and issue an order/decision.

Q A

Have you ever used a private mediator? Were they as successful as the CTTT mediators?

I have recently had the executive committee request a strata lawyer act on their behalf at mediation and they successfully had the applicant cancel the proceedings. This is unusual because generally because the CTTT is a tribunal, lawyers don’t attend. In this case it was because the defendant was a repeat offender.


STEPS TO MEDIATION

Q A Q A

Are the CTTT mediators successful in most cases or do people really just want their day before the CTTT?

In mediation that I have been involved with, have been successful and not gone to the CTTT, not always but certainly the majority can be settled. What are the most common issues/disputes that are resolved by mediation in your experience.

Common issues resolved at mediation would be parking, noise, attachment to common property (where people don’t realise the wall or balcony does not belong to them exclusively) and generally the breach of the standard Section 47 by-laws. NSW Fair Trading

Q A

What has usually occurred for a matter to end up at the Consumer, Trader and Tenancy Tribunal (CTTT)?

There are as many reasons as there are strata schemes. It may be a lack of communication, a breach of bylaws, unauthorised works to common property, a lack of understanding or strata legislation, a personality conflict or any other reason.

Q A Q A

Do most situations reach a satisfactory conclusion because of mediation?

Q A

Do you have an example of a highly successful outcome because of mediation and an example of one that dismally failed.

An owners corporation applied against an owner who was parking on common property without permission. During the mediation, the owner explained that their car space and training area was too narrow for their car (the underground car park was very tightly spaced). After further discussion it became apparent that one of the executive committee members had a better placed car space that they were not using as they no longer drove a car. An agreement was reached to swap car spaces – an agreement that no-one had foreseen and which restored harmony to the scheme. An owner applied against the owners corporation for urgently needed repairs and maintenance to common property. The scheme has a majority of owners who did not live at the scheme and rarely included themselves in meetings or any owners corporation decisions. The mediation could not achieve an outcome as the strata managing agent explained that too many owners were not paying their levies or concerned about the management of common property. The applicant decided to apply for a compulsory strata managing agent with full powers to manage the scheme and chase owners who were behind in levies.

Q A Q A

What happens when mediation works (any further paper work etc)?

About 70 percent of matters resolve at mediation.

What happens during a mediation session?

The parties will sign a written agreement at the end of the mediation session that details the terms of their settlement

What happens when mediation fails - next steps?

The mediator facilitates a discussion of the issues to help the parties better understand each other’s point of view. They may also bring in a NSW Fair Trading officer who can provide information about strata legislative requirements. This is often of great assistance as it may clarify such things as meeting procedures, levy obligation and repair responsibilities. All parties getting this information at the same time can help to avoid misunderstandings of the Act. The mediator will help the parties identify options and negotiate workable, realist terms of settlement.

Q

A

The parties should obtain any relevant factual information to support their case eg. builder’s reports, copies of the strata plan if common property is an issue, relevant photographs, copies of relevant by-laws. They should also consider what would be a workable outcome for them.

How should a party prepare for a mediation session?

If mediation is unsuccessful, the next step is for the applicant to apply for Adjudication before the CTTT. This involves lodging an application for Adjudication which should have a written submission with it that provides the evidence to support the order being sought. There is a one month period for parties to submit written submissions. The Adjudicator will then make a written decision about four to six weeks after the end of that written submission period. This story was supplied by BCS Strata Management.

StrataLive Summer 2013

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NEW STRATA VIDEOS - STRATA REPUBLIC

New videos aid understanding of strata issues

Wade McKenzie - Managing Director - Strata Republic.

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rogressive strata management company, Strata Republic, has begun producing a series of videos to inform the general public about important strata issues. The videos, which can be viewed on YouTube and on the Strata Republic website, cover subjects as diverse as off-theplan purchases, strata levies, concrete cancer and Owners Corporation responsibilities. Called The Strata Files, the videos are hosted by Wade McKenzie, who is the founder of Strata Republic. Each runs for around three minutes, and features experts in their particular field.

David Milton of CBRE Residential Projects is one of the experts.

“Apartment living is assuming greater importance in daily life, so our videos aim to help educate owners on relevant strata matters,” said Mr McKenzie. “The better informed people are then the greater the chance they will live harmoniously in a strata environment.”

The first two Strata Republic videos can be viewed on www.youtube.com/user/stratarepublic

StrataLive Summer 2013

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Strata Plus

for personal service and a proven track record

Call David or Olivera Ferguson on 9319 1899 www.strataplus.com.au


HOLIDAY SEASON - STRATA PLUS

By Olivera Ferguson

A

s the holiday season fast approaches, at Strata Plus we’d like to remind you how to stay safe and consider your neighbours. Here are our top 10 tips for peace of mind during the holidays.

1. Get to know your neighbours and watch out for each other. Be aware of any unusual vehicles, events, tradespeople or strangers frequenting your property. 2. If you’re having a party then it’s a great idea to let your neighbours know beforehand to expect some noise – better still invite them along! Remember to reduce noise and move indoors at 11pm. 3. If you have outside furniture on your balcony make sure you secure it during wild and windy weather, and especially if you’re going away. 4. Circulate a list of emergency numbers including Police, tradesmen, electricity and water services, and CrimeStoppers (1800 333 000). Report a problem immediately to the Police. Put these numbers in your mobile phone. 5. Ensure there are locks on all of your doors and windows. If your residence is visible from the street then install a timer on lights to make it look as if someone is home. 6. Engrave your valuables with your car licence number. That way if your goods are stolen they can be quickly traced. 60 StrataLive Summer 2013

7. Cancel newspaper subscriptions while you are away and arrange for someone to empty your letterbox – or organise for Australia Post to hold your mail. 8. When going overseas for a holiday or on business, long or short stay, register with the Department of Foreign Affairs and Trade before you travel. This helps to find you in the event of an emergency. Register online at: www. smarttraveller.gov.au 9. Make sure the phone number for contractor security gates, garage doors, and lifts are clearly visible in case there is a problem with access and you need to contact them. 10. Let your Strata Manager know if your contact details change. With the recent bushfires across the state we would encourage you to think about emergency protocols and plan ahead. The Strata Plus team wishes you and your families safe and happy holidays.


HOW LEVIES ARE SET - STRATA PLUS

Do you know how your levies are set? By Olivera Ferguson

O

wners corporations are responsible for expenses in a similar manner as to a conventional house. Examples of such expense are • Utility bills - electricity, water, gas, council rates • Maintenance bills - cleaning, gardening, plumbing, electrical. Owners corporations then have different (though still similar expenses) such as • Compliance matters - Annual Fire Safety Statements, lift monitoring & registration, building valuations, etc. • Insurance premium(s) for building, office bearers etc. Note that contents are not included. Other running costs include strata management, building management, consultants. The expenses are categorised into one of two groups or Funds 1. The Administrative Fund is set for day to day running expenses 2. The Sinking Fund is set for capital expenditure items that you would not expect to spend money on each year.

The levies set are your portion of these expenses The portion is determined by your Unit of Entitlement (UE) as compared with total UEs. The UEs are determined prior to the establishment of the strata plan and are registered on the strata plan with Land and Property Information NSW. Who approves the levies? The financial owners who attend the Annual General Meeting (AGM) make a decision to

1. Accept the proposed budget 2. Choose the number of instalment payments The most common payment number results in a quarterly levy cycle. The decisions made at your AGM are contained within the Minutes of the meeting which are sent to you. How to read the budget? The proposed budgets for both funds are attached to the Notice of the AGM. The budget for the Admin Fund is a line by line estimate of the expenses for the next financial year. It should also reflect the budget for the prior year and compare them with the actual expenses of the prior year. Depending on the age of your scheme, the budget may show additional years of budget and actual so that owners can evaluate with more information on hand. Many items are contract related or regular payments so you need to expect at least a CPI increase every year. Do you know how the budget is worked out? Your Strata Manager will often have involved a number of persons in preparing the proposed budget. This would include your Treasurer, other Executive Committee Members, and your building manager or caretaker where applicable. The process can happen thoughout the year as there may be a need to seek quotes after reassessing what services are needed - both the scope and frequency. Also market implications will influence costs, for example, the impact of carbon tax on electricity bills.

How to work towards getting your expenses down As an owner you can assist on fine tuning expenses in your building. www.smartblocks.com.au contains expert guides on how to achieve savings and reduce energy at the same time. It’s a national program aimed at apartment owners. How do you know what to pay? Your levy notice is sent before the due date to the postal address your strata manager has received in writing. In instances where your property is not owner occupied, it is important that you provide clarification on the correct postal address for levy notices, as it is your decision as an owner as to whether you or your property manager is responsible or the payment of levies. When must levies be paid? If a levy is not paid at the end of one month after it is due and payable, it bears simple interest at the rate of 10% (or any other amount prescribed by the regulations) from the due date until paid. If payment is not received by the due date then technically you are in arrears. It is important to note that the interest is payable to the trust account set up for your owners corporation. It is not monies received by your strata manager. For this reason, the strata manager does not have the authority to waive interest. Relevant legislation Strata Schemes Management Act NSW Chapter 3 Part 3. Olivera Ferguson is a Director of Strata Plus StrataLive Summer 2013

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Sydney’s Exclusive New Addresses By Laura Percy info

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ith the demand for apartment living in Sydney stronger than it has been for nearly a decade, property developers are seeking to stand out from the crowd by securing locations that afford conveniences and that are big on lifestyle. Stratalive talked exclusively to leading Australian real estate agency CBRE about four of Sydney’s hottest new projects: • Iluka at Bondi Beach • Industri at Newtown • Highpoint at Hurstville • Central Square By Toga at West Ryde

StrataLive Summer 63 Central Square By Toga2013 – West Ryde


SYDNEY’S EXCLUSIVE NEW ADDRESSES

Iluka - Bondi Beach Chic Beachside Living

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nviably positioned just 300m to the iconic sands of Bondi Beach, Amcrest’s newly completed development Iluka, offers boutique coastal luxury and access to a highly sought after Eastern Suburbs lifestyle. Located on Curlewis Street, this walk to everywhere address is just moments to Bondi’s vibrant cafe, fine dining and trendy wine bar scene, with its proximity to stunning coastal walks, exclusive boutiques and eclectic weekend markets further adding to its appeal. Designed by award-winning architects MHNDU, Iluka is sophisticated in its design, with 29 spacious 1, 2 and 3-bedroom apartments, some with optional study’s, ready to move into now. Featuring expansive north facing entertaining areas, all apartments come with security parking, lift access, gourmet CaesarStone Miele kitchens, polished timber floors, air-conditioning and a choice of a generous sized balcony or courtyard. Marketed at investors and owner-occupiers, Iluka has enjoyed a strong response among buyers so far, with almost 75% of the completed development sold on its launch weekend alone. Director of CBRE Residential Projects Ben Stewart said Iluka’s popularity with buyers is reflective of increasing demand for luxury residential developments in Bondi. “People don’t want to just be a tourist in Bondi anymore, they want to make it their home. “In recent years we’ve seen Bondi Beach gradually undergo a complete face-lift, with tired brick apartment buildings being replaced with modern, luxurious developments that fit with the upmarket retail and commercial landscape. “The Bondi Beach lifestyle is truly unsurpassed and it has never been more in demand than right now.” Prices at Iluka start at $870,000 for a 63-squaremetre 1-bedroom apartment with parking, 2-bedroom apartments from $1,095,000 and 3-bedroom apartments from $1,995,000. ILUKA, 108 Curlewis Street, Bondi Beach Ph: 0412 753 740 www.ilukabondi.com.au

64 StrataLive Summer 2013


SYDNEY’S EXCLUSIVE NEW ADDRESSES

Industri - Newtown Urban Living at its Best

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et in the buzzing heart of Newtown on the historic site of the original Mauri bros & Thomson engineering works, Industri offers a trendy Inner City location that promises buyers the very best of urban living. Industri has been approved for 174 studio, 1, 2 & 3 bed apartments and terrace houses, each incorporating innovative design, space saving innovations and environmental efficiencies. Launching in December 2013, the Al Maha development is well placed to enjoy all that Newtown has to offer, putting residents an easy walk to King Street’s restaurant, café and bar hub, Marrickville Metro, the lush green expanses of Sydney Park, Newtown and St Peters Train Stations and city bound buses. With interiors designed by SJB Architects, Industri will exude impeccable attention to detail, with polished stone bench tops, Miele appliances, premium fixtures and sparkling city skyline views to Sydney Tower as some of its many features.

With its facade set to blend with the character, heritage and charms of its surroundings, Industri is positioned to appeal to a broad range of buyers, from investors to couples, young families and first home buyers alike. Chairman of CBRE Residential Projects, Justin Brown said there had already been a strong surge of interest from prospective purchasers on the project. “This is not surprising as it is Newtown’s most significant development for the past decade.” “The variety of apartment types that Industri has to offer is being well received along with its close proximity to public transport and Newtown’s amenities.” “It will either make a fabulous investment or a perfect home.” Priced from $475,000, Industri’s estimated completion date is late 2015. INDUSTRI, 32-72 Alice Street, Newtown Ph: 1800 775 055 www.industrinewtown.com.au StrataLive Summer 2013

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SYDNEY’S EXCLUSIVE NEW ADDRESSES

Highpoint - Hurstville The Height of Luxury

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ffering unrivalled comfort, luxury and style, Highpoint by the Toga Group is Hurstville’s ultimate masterplanned community. With the development’s hotly anticipated final stage just released, buyers are being given one last opportunity to ‘live the high life’. Behind Highpoints grand gated entrance are three elevated towers known as the ‘Crown Jewels’; Ruby, Pearl and the latest release, Emerald. With 109 apartments on offer, the new release contains a diverse range of luxuriously appointed 1, 1 + study, 2 and 3 bedroom apartments, offering panoramic city, Georges River or idyllic garden views. Just a 25-minute drive to the CBD and situated within close proximity to

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Sydney Airport, Brighton Le-Sands beach, cosmopolitan dining, local parks, schools and the Royal National Park, Highpoint offers complete convenience. Keen to stand out from other developments in its class, Highpoint features an exclusive Rooftop Sky Garden with lounging space for taking in its panoramic city views, a communal herb and vegetable garden for residents use in home cooking and a private Garden oasis for all to enjoy. With architecture by Stanisic and Architectus and stylish interiors designed by award-winning Marchese Partners, Highpoint features generous entertaining terraces or courtyards, gourmet gas kitchens with European appliances and secure basement parking.

Tim Rees, Director of CBRE Residential Projects, said that the interest in Highpoint had been phenomenal and urged buyers not to miss out on getting into South Sydney’s hottest development. “Stage 1 drew huge buyer interest with 220 apartments selling in just 4-hours and there has already been an immense show of interest in Stage 2. “Perfectly positioned for its residents to enjoy a vibrant lifestyle, Highpoint’s success is that it has so much to offer.” Prices at Highpoint start from $425,000. HIGHPOINT, 458-460 Forest Road, Hurstville Ph: 1800 137 889 www.highpointhurstville.com.au


SYDNEY’S EXCLUSIVE NEW ADDRESSES

Central Square By Toga – West Ryde

A Lifestyle of Convenience

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ringing with it a new class of sophistication to West Ryde, landmark development Central Square by Toga has set a new benchmark for the suburbs residential landscape, offering a vibrant village feel and a lifestyle of convenience. Comprising of 205 stylishly appointed 1, 2 and 3-bedroom apartments, Central Square by Toga is located at the centre of West Ryde’s fastly flourishing town square, putting its residents at the centre of it all. With West Ryde Marketplace on its doorstep, the train station only 150m away and great schools, universities and parks within easy reach, residents are afforded the ultimate in everyday convenience.

Designed to create a feeling of wideopen space, the development is crafted around a ‘Residents Only’ private landscaped green that is big enough for everyone to enjoy, from kids wanting to kick a ball around, to adults wanting to read the papers in the sun. Add in the convenience of an onsite supermarket and residents really do have everything they need inside and out. With interiors by leading architecture and interior designers, Marchese Partners, the apartments have been designed to maximise seamless indoor/ outdoor living and with absolute comfort in mind. Chic bathrooms, expansive balconies, superb district views and sleek, gourmet kitchens

are just some of the luxuries that buyers have to look forward to. Director of CBRE Residential Projects Tim Rees said “There is strong demand for developments of this class in Sydney’s Inner North-West right now. With West Ryde being so accessible to everything Sydney has to offer, living here couldn’t be more convenient.” Priced from $480,000, Central Square by Toga is anticipated to be complete in late 2015/early 2016.

CENTRAL SQUARE BY TOGA Ph: 1800 200 877 www.csqbytoga.com.au StrataLive Summer 2013

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BY-LAWS PROHIBITING ON-SITE AUCTIONS

By-laws Prohibiting On-Site Auctions That’s right. A by-law can prohibit owners from holding on-site auctions.

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n 2006 the owners corporation of a strata building in Sydney’s Eastern Suburbs introduced a by-law prohibiting owners from holding auctions for the sale of their apartments in the apartments or on common property without prior written approval of the owners corporation. In about May 2013 an owner in the building advertised her apartment for sale in the local newspaper.  The advertisement indicated that the apartment would be sold at an on-site auction.  The owner had not applied to the owners corporation for permission to hold an on-site auction. The strata manager wrote to the owner’s selling agent to request the the on-site auction be cancelled.  The selling agent refused to cancel the auction.  The owners corporation’s lawyer subsequently wrote to the lawyer for the owner to request a written undertaking that the auction would not go ahead.  Again the owner refused to give an undertaking and instead asserted the by-law prohibiting on-site auctions was invalid. The owners corporation applied to a strata schemes adjudicator for an order restraining the owner, and her selling agent, from holding the on-site auction in breach of the by-law.  The owners corporation argued that the terms of the by-law were clear, the owner could not hold an on-site auction without the owners corporation’s permission (which she did not have), and that there were strong grounds for an adjudicator to make an order to prevent the auction proceeding. The adjudicator agreed and within 48 hours of lodging the application, the owners corporation obtained an interim order restraining the owner, and her selling agent, from holding the on-site auction.  The adjudicator was satisfied that the owners corporation had given the owner ample warning that the onsite auction of her apartment would constitute a breach of the by-laws and that the owner had not provided a meaningful

response to the owners corporation of its lawyers. On that basis the adjudicator was satisfied that an order restraining a breach of the by-law should be made. The case shows that by-laws prohibiting or placing restrictions on on-site auctions for the sale of lots in strata buildings are valid and, if appropriate, will be enforced by restraining orders made by strata schemes adjudicators.  In this particular case the owner complied with the adjudicator’s order, cancelled the on-site auction and held the auction elsewhere. For more information contact J S Mueller & Co Lawyers at jsmreception@muellers.com.au

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STRATA PROBLEMS? CALL THE EXPERTS

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P: 9562 1266 W: WWW.MUELLERS.COM.AU


DEALING WITH PERSONAL CHEQUES - JS MUELLER

Dealing with Personal Cheques Must personal cheques be accepted at meetings to pay outstanding levies and what are the consequences of acceptance? By Bruce Bentley – Partner JS Mueller & Co 

What do you do when an unfinancial lot owner wants to pay levy arrears with a personal cheque just before the general meeting opens? Owners who are in arrears in their levies will sometimes try to make themselves financial just before a general meeting opens in order to vote. They may try and do this by paying by personal cheque. Do you have to accept a personal cheque tendered before a meeting in payment of levy arrears? The practice of giving and accepting personal cheques is widespread and there is a general expectation that a personal cheque given in payment of a debt will be accepted but a personal cheque does not constitute legal tender and may be objected to either before or at the time the cheque is offered in payment on the basis that it does not constitute legal tender. You may refuse to accept the cheque. What are the consequences if you accept the cheque? Is the owner financial and is the owner entitled to vote? A personal cheque, though not legal tender, is a sufficient payment if not objected to on that basis (Wexelman v Dale (1917) 35 DLR 557; Laidlaw v Rehill [1943] 4 DLR 429; George v Cluning (1979) 28 ALR 47; 53 ALJR 767). In Tilley v Official Receiver in Bankruptcy [1960] HCA 86 the High Court held where a cheque is accepted as tender for a debt, the debt is discharged conditional on the cheque being met on presentation. In National Australia Bankv KDS Construction Services Pty Ltd[1987] HCA 65 the High Court confirmed Tilley and emphasised that the payment is complete at the time when the tendered cheque is accepted by the creditor. In Bottomley The Younger v Robert Nuttall (1858) 5 CB(NS) 122; [1858] ENGR 1197; Cockburn CJ said that the acceptance of a bill of exchange operates as a suspension of the drawer’s remedies until the maturity of the bill. This is the case even if the bill is unpaid and thereby becomes worthless at that time. The courts have held that payment required by a deadline is met if a cheque is tendered and accepted before the deadline in spite of the fact that the cheque could not be presented for payment before the deadline. In Holmes v Smith [2000] Lloyds REP Bank 139 a cheque tendered late in the morning for a payment deadline of 2.00pm was held to be proper payment. In Petroleo Brasileiro SA v ENE Kos 1 Limited [2009] EWCA 72 StrataLive Summer 2013

Civ 1127 a cheque handed in at 4.30pm was held to be timely payment for a deadline of 5.00pm. All of this means that if you accept a personal cheque which is tendered in payment of outstanding levies and debts a person is financial for the purpose of any vote taken before presentation of the cheque. If the owners corporation does not wish to be placed in that position it is fully entitled to reject the tender of the personal cheque but only on the grounds that the cheque is not legal tender.


DEALING WITH PERSONAL CHEQUES - JS MUELLER

In Tilley’s case Dixon CJ said: “Prima facie when a cheque is taken for the price of goods, or for that matter in respect of any other debt contracted, it operates as conditional payment. The condition is that the cheque be paid on presentation; if it is dishonoured the debt upon the original consideration revives...” In Bottomley v Nuttel Williams J described it as “the true doctrine upon which this branch of the law is founded, viz that, in the case of a money demand, if the creditor accepts a bill or note for and on account of the debt, that operates as a conditional payment...” In the well known judgment delivered by Lusch J for the Exchequer Chamber in Currie v Misa (1875) LR 10 Ex 153 this passage occurs; “the title of a creditor to a bill given on account of a pre-existing debt, and payable at a future debt, does not rest upon the implied agreement to suspend his remedies. The true reason is that given by the Court of Common Pleas in Belshaw v Bush (1858) 11 CB 191; 22 J (CP) 24 as the foundation of the judgment in that case, namely, that a negotiable security given for such a purpose is a conditional payment of the debt, the condition being that the debt revised that the security is not realised.” (1875) LR 10 Ex at P163. In the present case therefore once the cheque was taken by or on behalf of a seller of the goods the debt was conditionally satisfied.” In National Australia Bank the High Court said: “Generally speaking, when a cheque is given in payment of a debt, it operates as a conditional payment. The payment is subject to a condition that the cheque be paid on presentation. If it is dishonoured the debt revives. Although it is sometimes said that the remedy for the primary debt is suspended, the suspension is no more than a consequence of the conditional

nature of the payment; Tilley v Official Receiver in Bankruptcy (1960) 103 CLR 529 at 532-3, 535-6, 537. The condition is a condition subsequent so that, if the cheque is met, it ranks as an actual payment from the time it was given. Subject to nonfulfilment of the condition subsequent, the payment is complete at the time when the cheque is accepted by the creditor; Thomson v Moyse [1961] AC 967 at 1004.” From these cases it is clear that if a cheque is accepted and subsequently honoured the owner is financial and entitled to vote. What happens if the cheque is not honoured on presentation? Schedule 2 Clause 10(8) of the Strata Schemes Management Act states as follows: “Voting rights may not be exercised if contributions not paid A vote at a general meeting (other than a vote on a motion requiring a unanimous resolution) by an owner of a lot or a person with a priority vote in respect of the lot does not count unless payment has been made before the meeting of all contributions levied on the owner, and any other amounts recoverable from the owner, in relation to the lot that are owing at the date of the notice for the meeting.” The requirement in the schedule is that payment be made before the meeting. Tilley’s case and the Error! Hyperlink reference not valid.case indicate that the acceptance of the cheque does represent payment even though that payment is conditional upon the cheque being honoured. If the meeting takes place before the presentation and honour of the cheque the payment has been made at the time of the acceptance of the personal cheque. On this basis the lot owner is entitled to vote even if the cheque is subsequently dishonoured. StrataLive Summer 2013

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STRATA CHOICE - LEVY SHOCK Complex multi-tiered strata plans require detailed budgets

Levy Shock! Developers creating horror ‘storeys’

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e’ve all heard about Bill Shock, which usually is caused by unexpectedly high mobile phone charges. Now stand by for horror ‘storeys’ of a different kind as aggrieved apartment owners learn that their strata levies are way higher than the developer estimated. Some unscrupulous developers deliberately minimise strata fees when marketing off-the-plan apartments to make the on-going living costs seem less. Currently there is no obligation on developers to be truthful. The truth takes time to be revealed because several years pass from an offthe-plan purchase to the first levy notice arriving. Just as owners are starting to enjoy their new apartment they find that the levy ‘estimates’ given on purchase are up to twice as expensive. The issue is one of the most hotly debated on the specialist property

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websites, but one Sydney strata company is guaranteeing the end of Levy Shock. Strata Choice has a system that ensures accurate levies for individual apartments, and is offering it as a free service to developers. It also is advocating that strata laws include provision about the accuracy of levies in off-the-plan developments. The NSW Minister for Fair Trading, Anthony Roberts, will soon table in Parliament a complete overhaul of strata laws, which were originally devised 50 years ago. Accurate strata levies may not be part of the widespread reforms, but they should be. “The issue has finally bubbled to the surface because many buyers now realise they were misled by deliberately understated levy estimates,” said Jason Howitt of Strata Choice. “There is no reason why levies can’t be calculated accurately, which many reputable

developers do. But unfortunately there are many Developers who know that accuracy can be a deterrent to sales.” The Strata Choice system involves taking each cost component to the marketplace and obtaining binding quotes (based on the completion date of the project) from reputable suppliers for services such as insurance, gardening, cleaning, heating/ventilation/ air-conditioning, hydraulics maintenance and lift maintenance. It then calculates the total budget to cover administrative costs and sinking fund requirements for the overall development, and allocates an accurate levy to each individual apartment. “Basically it provides accurate levies based on a thorough analysis and we offer this service free to developers and project marketers. This is a real valueadd, providing certainty for purchasers. When the project has completed, it also demonstrates to Owners Corporations that we are worthy of being considered to manage their asset on an on-going basis.”

For information about Strata Choice call 1300 322 213 or go to the website: www.stratachoice.com.au


Living in strata?

Fair Trading is here to help you with • free info • expert advice

• mediating disputes • and more …

Go to www.fairtrading.nsw.gov.au or call 13 32 20 for more info.

Supporting local communities


making it seamless When an industry changes as fast as strata management, it can be tricky keeping up. Westpac has a team of dedicated relationship managers who’ll work with you to effectively manage levy collections and bulk creditor payments. Helping you stay in control, to put more energy into growing your business.

Talk to our National Head of Strata about how we can support you: Jason Roach on 0448 455 556 Or visit westpac.com.au/industry

Š2013 Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.


Strata made easy Supported by Westpac

A Adjudicator – A third party from a consumer/tenancy tribunal who decides on strata disputes. The involvement of a tribunal is often a second or third step in the disputes process, with a preference to see disputes settled locally where possible. Administrative Fund – A fund, for the benefit of the Owners Corporation, used to cover recurring expenses of a strata scheme. This will include anything from electricity and gardening, right through to the maintenance of common property. A portion of levies charged to owners is based on the estimates of these expenses. Separate consideration is given to amounts that are required for the Sinking Fund. Agenda – In a strata context, the agenda is a list of motions or issues to be voted upon or discussed at a meeting. Having a complete list of agenda items is essential prior to the meeting, as matters not on the agenda should not be voted on. It is important that all attendees are provided with this prior notice, as particular agenda items may influence the decision to attend. Aggregate Unit Entitlement – The net sum of all individual entitlements in a strata scheme. Alterations – Alterations are any improvements or renovations that are proposed or made to common property. Generally, the Owners Corporation must provide approval to complete such work, which can range from minor repairs through to major structural renovations. Most by-laws, or special rules of a strata scheme will include a statement that effectively prevents owners from making changes to their property that materially changes the overall appearance of the building. This might range from the addition of balconies through to external colour schemes that change the fundamental appearance of the property. Annual General Meeting (AGM) – An AGM is a meeting of owners and other interested parties (which are typically defined within the strata roll) that meet once a year. After the first AGM, an AGM must be held each year.

The agenda for an AGM can take a variety of shapes and forms but will generally include a: • Statement of the financial position and performance of the Owners Corporation • Motion that accepts the financial statements as provided to the Owners Corporation • Confirmation on the insurance policies that a currently held by the owners’ corporation and whether they are appropriate in terms of cost and risk coverage. An incomplete insurance policy can expose the Owners Corporation to substantial risk should an incident occur.

B Boundaries – Another source of confusion within strata managed properties is a clear understanding of where the lines between individual lots and common property are drawn. These rules govern the space within which an individual generally has the right to manage their property as they see fit (although reference should be made to the by-laws/special rules and the definition for alterations to identify possible exclusions). A well designed and documented strata plan should highlight common property boundaries via thick black lines, and be distributed so that all property owners are aware of these arrangements. All strata plans are registered, so if still unclear, reference should be made to the registered copy of the strata plan. Breaching of by-laws/special rules – On occasion, an Owners Corporation and/or managing agent will be asked to manage situations where a by-law has been breached. As with many instances when it comes to strata management, common sense and discussion is encouraged, however further remedies exist to issue a notice to comply on the person(s) who are breaching it. If this continues, various remedies exist across different states to pursue action as required (e.g. in NSW the Owners Corporation can apply to the Consumer Trader and Tenancy Tribunal for a financial penalty to be imposed on the individual). Budget - An estimate that outlines the future expense and income streams that a strata scheme is expecting to see over StrataLive Summer 2013

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the coming year. A separate budget will be prepared for both the Administrative and Sinking Funds by taking into account the surplus or deficit carried over into the new financial year. Building Manager/Caretaker – A role that is more commonly associated with larger schemes, a caretaker will typically manage the co-ordination of the maintenance for the property. The roles of the caretaker are delegated to them via the Owners Corporation, Key responsibilities for a caretaker may include the management of: • Common property • Access to and use of common property by tradespersons • Maintenance and repair of common property It is important that the caretaker is officially appointed via a contract, as this will detail their responsibilities and avoid any potential conflicts in regards to general accountabilities. As this is fundamentally important to the running of a strata managed property, the first AGM often includes an item to decide whether there needs to be a caretaker appointed (as discussed, this will usually depend on the size and structure of the premises). By-Laws/Special Rules – The all important (and often disputed) set of rules that all residents (both owners and tenants), in the strata scheme are expected to abide by. They can vary greatly between premises, but will generally cover topics such as safety, security, the keeping of pets, sound rules and the use of common property. The relevance of certain rules will change over time, and as such, owners are commonly invited to draft and propose rules that are voted upon in general meetings.

C Chairperson – A chairperson is a key position held within an executive committee, with the designated person working 78 StrataLive Summer 2013

closely with the treasurer and secretary. The primary role of a chairperson is to preside over all meetings that are hosted, and ensure that they run to agenda. Further, to ensure that decisions are made in line with the by-laws that are set out by the committee. Children – Most schemes will contain a number of by- laws/ special rules that relate to children, and primarily to ensure that they remain safe when on common property. This is particularly important in the context of insurance and public liability. A well-constructed set of by-laws/ special rules will identify and manage the risks associated with unsupervised children playing in common property, as well as highlighting areas on the premises that may be considered high risk. Outside of retirement village strata schemes, they are not allowed to prevent or restrict children from living on strata premises. Common Property – In essence, the area of land and parts of a building in the strata plans that do not form part of a lot. Common property is jointly owned, and the Owners Corporation is responsible for the management of all areas that are defined as per the spaces set out in the strata plan. Defining what is common property is a complicated (and at times, passionately debated) topic, but essentially includes the following: • All external or boundary walls (including doors and windows) • Floors including a ramp or stairway • Boundary walls including any door, window or other structure within the wall and their working parts • Ceramic tiles originally attached to a common property surface (e.g. the floor or boundary wall). • Pipes in the common property or servicing more than one lot • Electrical wiring in the common property or servicing more than one lot


• Floor boards originally installed Certificate of Title A document that details who has ownership rights to a property. The Owners Corporation should also hold a title deed that confirms their rights to the common property via entitlement. The certificate of title should be registered at the respective office in each state. Common Seal – The official stamp that an Owners Corporation can use to indicate its official agreement. Strictly speaking, the stamp must show the Owners Corporation’s distinctive number, which includes the registration number of the strata plan. The stamp can be applied whenever the Owners Corporation executes a document. Company Nominee – A person nominated by a company (in writing) to vote on its behalf at meetings. Company Title - A slightly different style of land ownership where a person receives the entitlement to live in a residential building by acquiring shares in an incorporated company that owns the building. As with a standard purchase of property, the purchase of shares in the company gives the shareholder the contractual right to occupy and use a specific space within the building (as well as being subject to the house rules that govern things such as common property). Covenant Chargee – A person or legal entity who holds an agreement over the property which can impose an obligation to engage in or refrain from a specified action (e.g. an agreement to build a fence).

D Delegation of Power – As it relates to body corporates, voting rights are generally allocated according to the number

of units (as opposed to the number of individuals). If an individual owns 50% of the units in a strata complex, they will be entitled to 50% of the votes. This is important in terms of understanding the hierarchy of power, which in essence can see decisions from the body corporate flow through to the executive committee, which in turn may go down to the delegated officer and/or subcommittees that are set up for a specific purpose (e.g. to provide advice on a specialized piece of legislation).

E Election of the executive committee – The executive committee is elected (or re-elected) at each AGM. The committee’s first decision will be to agree on who holds the key positions of chairperson, secretary and treasurer. Exclusive Use – A special right granted to an owner to use a part of the common property (e.g. the use of a garden bed or car space). The right may be granted for a purpose that ultimately benefits others in the property. Executive Committee (EC) – The Owners Corporation will elect an executive committee that makes many of the dayto-day decisions about running the scheme on its behalf. The Owners Corporation will usually reserve the right to over rule executive committee decisions. Furthermore, they can limit what they can make decisions about, which may include the imposing of a number of obligations and/or restrictions. These rules are generally discussed and agreed to at the AGM. Executive Committee Meeting (ECM) – A meeting of the executive committee members which excludes non- committee members unless prior authorization has been given. StrataLive Summer 2013

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Extraordinary General Meeting (EGM) – These meetings may occur during the year as required. Examples of when these will be called include to: • Change, cancel or make new by-laws/special rules • Appoint or dismiss a strata managing agent • Agree on the need for capital works and any associated funding requirements to support the activity (be it via a one off levy or through seeking finance via bank) There are a number of ways to convene an Extraordinary General Meeting, depending on the legislation for your jurisdiction. The most common ways are: • By majority vote of the executive committee • If owners entitled to vote, and who together hold at least one quarter of the total unit entitlements, give a written notice to the secretary asking for the meeting to be held.

Floor Coverings – Increasingly, a number of strata schemes have by-laws that require floors to be treated and/or covered to prevent noise being heard in other lots. The increasing prevalence of highrise apartments is driving this. Rooms that are exempt from this are typically kitchens, laundries, lavatories and the bathrooms of a property, although it is important to review the by- laws/special rules to have a full understanding of what is required.

F

G

Financial – Strata ‘jargon’ that is often used to identify an owner who is up to date with all of their levy payments and other financial contributions.

Garbage – Whilst this would appear to fall squarely in to the category of common sense, it is the responsibility of the owner/ occupier to maintain a clean, dry and adequately covered garbage bin in their lot. Furthermore, that all garbage is securely wrapped. Depending on the cycle, garbage should generally be placed outside no earlier than 12 hours before collection.

First safety inspections – The Owners Corporation is responsible at all times for ensuring that access is given to all parts of the scheme so that necessary first safety inspections can take place as required. It is important that all property owners are also aware of their obligations as it relates to providing access to their property for these inspections. First Annual General Meeting (FAGM) – The first meeting of owners and other interested parties (as noted on the strata roll). This meeting should generally occur as soon as is practical.

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Furniture – It is important to notify the executive committee where plans have been made to move large objects through common areas. This assists the committee in terms of them being able to support the move wherever possible. (e.g. by covering up the lifts to avoid damage). Some schemes will have by-laws/special rules in place which will specify times when residents may move in/out.

Gardens/Backyards – A question raised often in general meetings, is what the owner has the right to do in respect to their backyard. Certain activities may be classified as alterations, which attract their own set of rules should they fundamentally change the appearance of the building. The general rule is that as long as the backyard is part of the lot, the owner can do what they want as long as it doesn’t breach a by-law (e.g. damaging common property or creating excess noise).


An owner or occupier must not damage any lawn, garden, shrub, plant or flower on the common property and should not use any part of common property as their own garden unless a specific motion is passed to allow this. Guests/Visitors – In essence, another topic that should be covered by common sense principles. An owner/ occupier should at all times ensure that invited guests are behaving in a way that will not disturb other residents and their guests. This provision applies irrespective of whether the individual is within private premises or on common property. The behavior of guests is quite often covered within by-laws, particularly when it comes to issues such as the use of a pool and visitor car parking spaces.

H Harmony – Industry jargon that is used to describe the general level of ‘owner contentment’ that exists within a scheme. Having an active and consultative approach to identifying and managing issues as they arrive is usually the best approach to achieving the right harmony outcomes. This is generally a topic raised during general meetings, with the result at any one time being influenced by things such as disputes between neighbours, local government councils, other owners, the executive committee and many other individuals. Home Warranty Insurance – This type of insurance was created to protect consumers when a builder and/ or contractor (e.g. plumber, carpenter) passes away, cannot be found or becomes insolvent. In essence, the insurance is there to cover situations where the builder is unable to fulfill their obligation to the consumer. In NSW, this insurance generally covers situations where a builder is unwilling to honour such commitments and their licence is suspended for failing to

comply with a money (Compensation) order in favour of the homeowner made by a court or the consumer, trader and tenancy tribunal. Exclusions, limits and conditions apply, and it is recommended that you read your policy to understand what situations are and aren’t covered.

I Initial Period – A period of time that commences on the day that the Owners Corporation is constituted (date of registration of the plan) and ends on the day when there are proprietors of lots, other than the original proprietor, the sum of whose unit entitlements are at least 1/3 of the aggregate unit entitlement (or as determined by legislation). Insurance - The relevance and importance of insurance is something that flows through right from the building of properties to the ongoing management of them once they become lots within a strata scheme. The Owners Corporation is responsible for making sure that all necessary insurance policies are in place and are up to date. All policies should sit with an appropriate insurer to minimize risk should a policy need to be enacted. Different types of insurance include: • Building insurance – This type of policy covers the building if damaged or destroyed by fire, lightning, an explosion or any other cause that is stated within the policy. The purpose of the policy is to cover the reinstatement or replacement of the building to put it in the same condition as it was when new, remove debris and cover all expenses that area required to bring the place back to its original state (e.g. architects). • Public liability insurance – This insurance ensures that there is sufficient cover for death and/or injury that results from any activity for which the Owners Corporation could be deemed responsible. StrataLive Summer 2013

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• Workers compensation insurance – This type of insurance ensures that all individuals who are working on a property are covered for workers compensation. • Voluntary workers insurance – This type of insurance covers the Owners Corporate against damage that it may become liable for when a person completes work as a volunteer and on behalf on the Owners Corporation.

Unpaid Levies – Unpaid levies may incur interest if not paid on time. If the unpaid levy goes beyond a set period of time (usually defined within the by-laws), the Owners Corporation has the ability to take debt recovery action. Conversely, an Owners Corporation may also consider the provision of a discount where levy payments are received before they are due.

L

Lot – A lot is defined as a dwelling within a strata scheme that comprises the living space within the boundary walls of the property space. Car spaces, garages, laundries, marinas etc can also form part of a lot or be a separate lot themselves.

Laundry Items – Specific by-laws may prevent an owner and/ or occupier from hanging washing towels, bed sheets, clothing or anything else on any part of the strata scheme (e.g. on the balcony) where it can be seen from outside the building. Levies – In terms of a definition, levies are contributions by the owners to the Owners Corporation to cover regular expenditure, as well as to fund future capital works activities. In some states, the amount that is paid by each owner is regulated by the unit entitlement of their respective lot, with contributions being splilt between the administrative fund and the sinking fund. As defined in this guide, the administrative fund primarily exists to fund day-to-day operation expenses, with the sinking fund in place to fund long-term future expenses. In terms of the longer term expenses, the sinking fund can be utilized to cover anything from re-painting of the common area, landscaping, elevator maintenance through to the addition of solar panels. From a lot owners perspective, one should be aware from the outset as to what the levy will be, and more importantly, what the state of the property is and what the levy will cover. Levies in strata schemes that have a number of shared facilities can quite often be expensive, particularly as it relates to swimming pools, saunas, tennis courts, etc. Levy Register – A historical record of levy contributions made. 82 StrataLive Summer 2013

M Minutes – A documented record of all discussions, decisions and action items arising from meetings held by the Owners Corporation and executive committee. General meeting minutes should be sent out with the notice for the next general meeting (or if possible, earlier). Minute Book – A document repository (that is usually hardback/bound, but may be electronic), that holds the notices and minutes of all meetings held by the Owners Corporation and executive committee. The minute book is important and is commonly used as evidence in disputes where there are differences of opinion in regards to what was agreed to in meetings. Model By-Laws – A standard set of rules that can be utilized as the actual by-laws for a strata scheme or as the template from which specific by-laws are created for the community. Motion – A proposal that is put forward for consideration at general meetings.


N Noise – One of the most common ways that this is seen is often in conflicts about noise, and as such, strata schemes have specific by-laws in place that dictate what is and isn’t acceptable. As with many strata by-laws, common sense should prevail, although it is also worth noting that visitors are generally expected to be made aware and abide by these same rules when visiting. Most by-laws will included remedies to issue breach notices and/or fine individuals that do not comply with the agreed upon noise rules. Notice of meetings – Notice of both an Extraordinary General Meeting (EGM) and an Annual General Meeting (AGM) must be given to each owner of a lot in advance. Notices for a general meeting generally contain: • A motion to confirm the minutes of the last meeting • Other motions to be considered at the meeting • Motions that need a special or unanimous resolution • A copy of the minutes of the last general meeting • If it is the AGM, a motion for the election of the executive committee and the number of members that will form the group Noticeboard – Whilst perhaps a minor detail, it is important to keep in mind that a noticeboard is only required if it is stated as such in the by-laws. Where a noticeboard does not exist, all meetings and other notices will be sent to each owner directly.

P Parking - Another common source of discussion, and at times, debate amongst Owners Corporations relates to parking rules. Generally owners and residents cannot park on the common property without the explicit permission of the

Owners Corporation. Visitors are invited to park in designated visitor parking spaces where an allowance has been made for them. Parking Lot - A lot designed primarily for storage of boats and/or motor vehicles. This type of lot is commonly also known as a utility lot. Pest Treatments - Most states will include regulations that require residents of multiple occupancy dwellings to be notified when licensed pest controllers apply pesticides to any areas of their parking lot. Poll - A method of voting at meetings where each owner’s vote has a value based on the lot’s entitlement. Proxy - A person appointed (usually required in writing), by an owner or mortgagee to attend a meeting and vote on the appointer’s behalf. The proxy form should: • State the duration of the proxy. Typically for a period of time or a specific meeting • State which matters the persons acting as proxy can vote on • Detail how the person acting as the proxy should vote on a motion for the appointment or continuation in office of a strata management agent • Have no effect if the person who gave the proxy attends the meeting and votes in person Pruning Trees - If the trees are common property, it is the Owners Corporation’s responsibility. If the trees are part of the owner’s lot, then the owner needs to ensure that they manage them. Having a thorough understanding of the bylaws is usually the best way to understand what requirements apply. StrataLive Summer 2013

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Q Quorum - The minimum number of eligible attendees at a meeting before a motion can be formally voted upon (keeping in mind that the motion needs to be included in the agenda beforehand).

R Repairs - The rules that govern repairs are relatively simple (in theory). The Owners Corporation must repair anything that relates to common property, and the owners must repair anything within their lot. In practice though, this is not always the case. As a general rule, anything that is inside the airspace of the unit is the owner’s responsibility and anything that is outside is the Owners Corporation. Again, it is important to have a clear understanding of the bylaws for any specific rules that relate to repairs, and ownership clarifications for any particular item(s) within the premises. In terms of managing repairs that are Owners Corporation responsibilities, the managing agent or secretary of the Owners Corporation should be notified in the first instance. For large/ expensive problems, a general meeting may be required to agree on the next steps. Resolution - A decision reached at a meeting based on a motion that is considered at a meeting. There are three types of resolutions. • Ordinary resolution: a decision of the meeting (made after the taking of a vote) • Special resolution: a special resolution is where no more than 25% are cast against the motion, (based on unit entitlement). This includes votes in person and also proxy votes. • Unanimous resolution: a unanimous resolution is one where no one votes against the motion. If a nuanimous resolution 84 StrataLive Summer 2013

is required, all owners should be at the meeting or should participate in voting via a proxy. This includes owners where their levies are not paid and up to date.

S Safety Audit - An inspection carried out by a qualified professional on the current status of the health and safety standards for the scheme. Secretary - One of the three main office holders of the executive committee, with the other two being the chairperson and the treasurer. The key responsibilities of the secretary include: • The preparation of minutes of meetings and putting a motion to confirm the previous minutes • Issuing notice for the Owners Corporation and its executive committee • Managing the strata roll and ensuring that it is kept up to date at all times of the year • The provision of information on behalf of the Owners Corporation • Convening meetings of the Owners Corporation and its executive committee (apart from the first AGM) Sinking Fund - A sinking fund is specifically for the management of major repair and replacement work on a scheme. This can cover a wide variety of activities, including everything from the re-painting of the property through to the placement of solar panels. The general idea of the sinking fund is that it should ensure that there will be enough money available to pay for expenses when substantial work needs to be undertaken. SP - Commonly used industry jargon for the term Strata Plan.


Special Levy - An at times unpopular additional levy contribution that is paid by the owners to cover unplanned, unexpected or underestimated expenditures. Special Resolution - A resolution that requires at least 75% of votes present to be in favour of the motion. As per the other votes, the concept of unit entitlement comes in to play, and the vote is based off this calculation. Failure to reach 75% of the votes in favour will see the motion being defeated. Strata Inspections - In some states, prospective purchasers are permitted to inspect the books and records of an Owners Corporation. Alternatively they can purchase a report that provides records of the body corporate and other information that may be of relevance (particularly when a prospective purchaser wants to make an assessment of important details such as the amount of insurance cover). Strata Managing Agent (SMA) - In most states, a suitably licensed and qualified professional entity (or individual) that is appointed by the Owners Corporation to manage the affairs of the strata scheme in accordance with all responsibilities that have been delegated to them. Strata Plan - The actual plan registered at the respective land titles office showing the building on the land, the lots that make up the plan and all areas within the premises that are deemed to be common property. Strata Roll - The register of the owners of every lot in a strata scheme including any utility lots.

the Owners Corporation to allow an inspection to be carried out on the records and accounts of the strata scheme.

U Unanimous Resolution - A resolution that requires 100% of the votes at a meeting to be in favour of the motion (including votes from owners who are not up to date in terms of their levy payments). Unit Entitlement - Each lot within a property is given an entitlement. The amount of the unit entitlement will vary depending on a number of things, such as the size of the lot and what is contained within. These entitlements govern what percentage of the annual budget levies will be paid by each lot owner. These same entitlements transfer across to voting rights in most states. Utility Lot - A lot designed for the storage or accommodation of boats, motor vehicles or other goods. It is not to be used as a residence/ for commercial use.

V Vehicles - An owner or occupier must not park or stand a vehicle on common property without the written permission of the Owners Corporation. Voting - Each executive committee has one vote at a meeting. A decision on any motion at an executive committee meeting is made by a majority vote.

Strata Search - A strata search is where an owner or mortgagee of a lot, or a person authorised by them, requests StrataLive Summer 2013

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DODGY TENANTS - BCS

Dodgy tenants: how to spot and avoid them I

nvestors take a big risk when they buy a property and lease it out because they never know what they are going to get. At the end of the day all the landlord wants is someone quiet to live in the property and pay the rent on time. All the tenant wants is to live in the property free from interference from the landlord and on that basis they will likely pay the rent on time. The best way to check out a tenant is to use the expertise of a property manager. Not to be confused with a strata manager, a property manager manages a rental roll and deals with landlords, tenants and not with common property and owners corporations. Clare Siaflas from Complete Home Hunters is a seasoned professional and has honed her skills at spotting a potentially bad tenant. “We process all applications received and submit the information to our landlords based on the evidence provided. However, sometimes when showing properties to potential tenants, you cannot help but critique them to some degree,” Clare said. “Property management is as much about people management than anything else and dealing with difficult tenants is something all agents try to avoid.If a person is difficult before they even apply

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for a property it can be like a sign above their head flashing “WARNING”. “A person who is particular about their presentation and manner usually indicates they want to live nicely and in good surroundings and they are generally going to make a good tenant.” When choosing a tenant Clare suggests having a very thorough tenancy application and referencing process with a 100-point identification system including a “Zero Tolerance Arrears” clause. It’s important to gather as much information on potential tenants as possible. “We ensure the applicant can afford the property in the first instance and talking to previous agents about their dealings with the tenant can also be invaluable.Some people are on their best behaviour when applying for properties, putting their best foot forward. However, previous agents can offer insights into how they kept their previous homes and what they were like to deal with. “It is vital to be reassured the applicant has a history of good tenancy. One applicant, for example, seemed ideal until we spoke to their previous agent who informed us of all the damage they’d caused at their previous rental. Needless to say, our landlord ended up selecting another tenant who we haven’t

had any issues with to date.” Clare was also happy to provide tips for landlords in finding the right tenant. First up was making sure the property gives the right impression. “Often the way a property is presented and marketed will be reflected in the calibre of tenants it interests.If properties are immaculately presented, we find they tend to attract good tenants who want to maintain that level of presentation. “On the flip side, if a property is poorly presented and unappealing this is often reflected in the asking price and tenants


DODGY TENANTS - BCS

of a lower calibre will usually apply. I have to stress that this is not always the case and you really have to be fair when processing applicants.� What do you do however if you get a really bad tenant? There are a number of blacklists around which boast thousands of listings so you theoretically can check if your prospective tenant has an undesirable history or add someone to a tenant blacklist. The NSW Office of Fair Trading has advice about these databases on their site and you should treat them with

caution. The OFT says only tenants can be listed on a database. Approved or unapproved occupants, visitors or children cannot be listed. Listing can only occur when the tenancy has ended and you can’t list someone because they simply fall behind in rent, are given a termination notice or are not looking after the property in a satisfactory way. There are only two reasons someone can be listed: They have vacated owing an amount more than the rental bond for a breach of

the agreement which is still outstanding at the time of listing. The Tribunal has made an order terminating the agreement because of something they have done wrong and the tenancy has ended. Any information recorded on a database must identify the reason for the listing in an accurate, complete and unambiguous way. Similar laws apply in Queensland and Victoria. This article appears courtesy of BCS StrataLive Summer 2013

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Responsive, adaptable and cost-effective access to top-quality legal expertise in Strata & Community Title Chambers Russell Lawyers is proud to be able to offer its clients the highest quality legal expertise in all facets of Strata & Community Title Law, from building defects, construction, and insurance law to dispute resolution, service contracts, by-laws and more. Chambers Russell Lawyers is staffed by widely recognised experts in the field with experience acting for all stakeholders in the Strata & Community Title space, from individual lot owners and owners corporations through to ASX 200 companies and the New South Wales Government.

Call us to speak directly with Partners Scott Chambers and Daniel Russell today. p +61 2 9233 1201 f +61 2 9233 1365 e info@chambersrussell.com.au Office Suite 404, 350 George Street SYDNEY NSW 2000 All correspondence to GPO Box 7100 SYDNEY NSW 2001


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nderstanding strata is not always easy. That is why we started www. stratalive.com.au. Strata lawyers and managers come into the stratalive forum to help lot owners who are having issues. Legal experts Daniel Russell from Chambers Russell Lawyers, James Moir from JS Mueller & Co Lawyers, Michael Pobi from Pobi Lawyers and Colin Grace from Grace Lawyers have helped out some of our lot owners. If you need help, go to www. stratalive.com.au These opinions are given on limited information so please remember to always seek independent legal advice.

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Q

I live in a strata apartment in NSW with a specific bylaw banning timber flooring due to noise transmission. This seems reasonable as the sound insulation is far from ideal in the block. With this in mind, I have approached our strata manager about installing cork which is not timber, and is well known for its sound insulating properties. However, our strata manager is suggesting that cork is a timber - which it is not! I was wondering what can be done about this issue of definition. I agree that everything should be done to minimise sound transmission. However, carpet is not an option for health and hygiene reasons, and cork offers great noise insulation.

A

If cork is not timber, then by installing it you are not in breach of the by-law. If you are not in breach, then go ahead and do it. The owners corporation would need a Consumer, Trader and Tenancy Tribunal order to have you reinstate it. Your risk is therefore whether an Adjudicator would consider it a breach of the by-law. Answer: James Moir – JS Mueller & Co Lawyers

Q

I just wanted to ask if it was possible for a community association to enforce a special levy against the owners in a strata scheme and/or a neighbourhood scheme (both in the community title development) with respects to neighbourhood property (common property of the neighbourhood scheme) or only just for community property?

A

In a Community Scheme the responsibility for maintenance and repairs of property lies with the owner of that part of the land (subject to what is in the community management statement). So, in the Community Scheme it has to look after community property (lot 1), in a strata the strata looks after strata

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common property and in a neighbourhood it looks after the neighbourhood property (lot 1 in that plan). There is provision in the Act to transfer the obligations to the community association. Complex enough yet? The community management statement is the overiding document (it has all the rules in it). Every individual “proprietor” and every “subsidiary” scheme (a strata plan) must also comply including the individual lot owners. The system for management is cascading downwards from the umbrella community association. The Association has the power to enforce the Management Statements as does the Strata Scheme and even an individual lot owner (in some instances). The funding works in the same way in that it cascades down. The Association is responsible to look after its property and as the strata or nieghbourhood scheme are part of it, they will pay its share of costs. Unless there is something in the management statement transferring the obligations for the neighbourhood property to the community association then it would probably remain with the neighbourhood (these are called restricted neighbourhood or strata property by-laws - look for them). Community associations are relatively complex animals to manage and understand but if you start with the management statement and discuss it with your community manager you may be halfway there. Answer: Colin Grace, Grace Lawyers

Q A

We have hit summer. Am I allowed to have a barbeque on my balcony?

Whilst one occupier may wish to enjoy a barbeque outdoors, another occupier may be suffering from fumes being transmitted into their own unit. Section 117 of the Strata Schemes Management

Act 1996 provides that an occupier of a lot must not use or enjoy the lot in such a manner as to cause a nuisance to the occupier of any other lot. Given the trend of decisions in the NSW Consumer, Trader and Tenancy Tribunal (CTTT) supporting the view that smoking cigarettes on balconies may constitute a nuisance, there is no reason why charcoal or other fumes and odour emitted from a barbeque on a unit balcony should be treated differently. Also, there is nothing to stop an owner or occupier of a strata unit commencing legal proceedings in the courts against another owner or occupier in nuisance claiming damages. To avoid unnecessary litigation between neighbouring strata occupiers, we recommend the owners corporation register a section 47 by-law restricting the use of charcoal or woodfire barbeques on selected balconies. Answer: Michael Pobi – Michael Pobi Lawyers

Q

Our building has about 80 apartments, with an underground parking where each owner has his own parking space on title - some are caged (legally by the owner), some have storage cage by default and some (most) are just normal spaces (i.e. not caged). They are all underground and secured by an automatic gate at the entrance to the basement. Many owners store items in the their spaces, and many have storage sheds (the type you usually put in your backyard), others just leave things as is. Altogether about 80 percent use it for storage as well as parking. Twelve months ago, our EC started sending letters to residents in the scheme that they need to remove items, as they were ‘unsightly’. When challenged they pushed a by-law through a few months after in the AGM that in my opinion is completely illegal - it gives the Executive Committee the power to decide on what goes in the parking bays (i.e. just cars or sheds that have to be approved by them! You must ‘apply’ to put anything there),


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and they also have the power to enter and remove items that weren’t approved – making the owner responsible for the cost or removal. Now, from talking to certain people, including the Fair Trading helpline, this is illegal (break and enter, theft etc) as this space is under the owner’s title. They can’t even, by law, tow cars from common property - so how can they take possessions from owner’s own parking spaces? Moreover, to decide what we can have in the car park (it is underground) which is NOT seen from outside the building is completely ridiculous - and given that everyone has different brand of car, and many of the Executive Committee members have storage sheds - in obviously different shapes and sizes. Before I go to the CTTT about this, I would like the opinion of a strata lawyer. Do I have a case? What will the CTTT do if it finds me in favour?

A

There is no doubt that the owners corporations can regulate what you can and can’t keep in your lot or your car space. The standard by-laws do this, eg by-law 10 (no hanging washing in lots if visible outside the scheme), by-law 12 (no storage of inflammable substances without consent), by-law 14 (floor coverings in lots must prevent noise transmission), and by-law 17 (must not, without consent, keep anything in the lot that is not, when viewed from outside the lot, in keeping with the rest of the scheme). Whether the by-law can validly bestow enforcement powers on the owners corporation, such as the power to take property and pass on costs, is another question. If it is an exclusive use / special privilege by-law (which would require the consent of each lot owner) the argument may be more complex, but otherwise such conditions are arguably unlawful for a variety of reasons, the thrust of which is that the owners corporation’s powers to enforce a breach of the by-laws are provided for in the Act, as are its powers to enter onto a lot, and arguably cannot

be expanded upon by way of a by-law. You should also be aware that usually you would be required to obtain at least written consent from the owners corporation to keep or install things in your car space, and perhaps a more substantial form of authorisation would be required. Keep in mind too that the actual floor and walls (if applicable) of the carspace would usually be common property (the lot itself is usually only the airspace). Answer: Daniel Russell, Chambers Russell Lawyers

Q

What is the best way to get rid of our strata management company apart from having an Extraordinary General Meeting (EGM)? Is there another way? Our strata manager is not doing his work accordingly and when given instruction by the Executive Committee, he will make excuses to avoid it or delay it as long as possible. We have had enough and would like to change companies but I understand it is a very difficult task to remove them. Any suggestions?

A

Appointment and delegation of functions to a Strata Managing Agent, and the corresponding termination and revocation of delegation, must all be approved by a resolution in a General Meeting. Although you should always ensure in such circumstances that such a meeting is properly requisitioned, proper and due notice is given, and correct minutes are recorded, the reality is that the meeting itself is only a necessary formality. The main legal issue is what the terms of your contract says. More recent contracts must allow for termination on three months notice after the initial term. Your agreement might be in or out of an initial term. Otherwise termination will usually be permitted by reason of breach, but there will be contractual mechanisms that must be properly engaged, notices given, etc etc. If your strata scheme (or your strata manager) is not StrataLive Summer 2013

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functioning properly, you could consider a compulsory appointment application under section 162, but this is a drastic remedy and really only terminates the existing agent incidentally (its purpose is to rescue a mismanaged strata scheme). There are of course other legal means to seek to challenge contract terms or the validity of contracts. As always these are matters for legal advice, for which my comments are no substitute. Answer: Daniel Russell, Chambers Russell Lawyers

Q

I would like to find out more information e.g. method, requirement to split our strata plan. I am one of the residential owners. A group of residential owners currently have some tensions/ disputes with the hotel (tenants) who operate in the same building and therefore would like to seek advice on splitting the strata plan. Not sure if it is very hard to achieve.

A

You won’t get a proper picture of what is required unless you start to engage some experts to assist. A lawyer is a good place to start. One of the first things we would do is to talk to an experienced strata surveyor, so you might want to start there instead. Assuming you are currently just one strata scheme, you are most likely looking at trying to implement a stratum subdivision, where different parts of the building are either separate strata schemes or deposited plan lots bound together by an additional layer of administration under a Strata Management Statement (which is controlled by a Building Management Committee, hence these kinds of arrangements are often referred to as “BMC”s). A Strata Management Statement allows for costs to be shared in more tailored ways that can be achieved under by-laws, and allows for greater control over dispute resolution processes. The process is not easy and requires a substantial amount of surveying and resubdivision work, as well as the

preparation of a Strata Management Statement and new by-laws for the strata schemes. In effect you must do most of the work to dismantle your current strata scheme and create two (or more) new strata schemes and a Building Management Committee. You will also need to convince Council (or your relevant consent authority) to allow the development, obtain a development consent, and (except in very rare circumstances) unanimous support from owners in the strata scheme. You should give some thought to how you might be able to implement make-do solutions using by-laws, such as a regime of exclusive use/special privilege by-laws that grant rights to hotel tenants in return for increased shares of maintenance costs or various other terms, conditions or restrictions. Answer: Daniel Russell – Chambers Russell Lawyers

Q

After a correctly convened Executive Committee meeting the letter below was sent to our managing agent, whom I have called ABC. The letter was sent after previous requests had been made for ABC to provide strata roll information. ABC response was; we cannot provide the details of absentee owners because of the Privacy Act. At a later date, on advice from ABC we carried out an inspection of the SP records under S108, but again ABC refused to provide the strata roll information After reading the letter below, do you think ABC’s response meets the requirements of the Strata Schemes Management Act 1996? If ABC has failed to meet the requirements of the Act can the Owners Corporation terminate their services. LETTER POSTED 30th May 2011 NOTICE (s105) TO: ABC RE: Request ABC to provide a copy of Strata Roll to the Owners Corporation Through a correctly convened Executive Committee Meeting and after speaking with the Office of Fair Trading

(OFT), Strata Services Division the following approach was suggested to obtain a copy of the Strata Roll, (s105) 1. The Owners Corporation request that ABC at no cost and within seven (7) days of receipt of this letter provide a current complete copy of the Strata Roll to the Owners Corporation 2. If ABC does not provide a copy of the Strata Roll within seven (7) days the Owners Corporation will seek mediation under section 105 of the Strata Schemes Management, Act 1996 3. The OFT indicated the Strata Roll and all records held by ABC are the property of the Owners and ABC only hold these documents on their behalf. For and on behalf of the Owners Corporation.

A

There is no question the strata manager must provide you with the strata roll. I’ll tell you on what basis in a second. Some strata managers (I could name some), who know an owners corporation is unhappy with their performance, refuse to give out the strata roll information, so that owners can’t call their own general meetings. They use “privacy concerns” or something similar as an excuse, but in fact there are no privacy laws over-riding their obligation. Ask the strata manager to name them. Section 98 of the Act sets out what must be in a strata roll (eg names and addresses of owners). Under section 108, any owner may ask to see the strata roll and can also take a copy, though there could be an inspection and copying fee. The owners corporation can take action in the CTTT for failure by the strata manager to permit access. Another way to obtain the information is through clause 40 of the Property Stock and Business Agents Regulation, which allows an Executive Committee member to access this information almost immediately. For breach of this regulation the owners corporation could report the strata manager to the OFT and ask it to take action. The strata manager has to remember that the owners corporation owns this StrataLive Summer 2013

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information and the strata manager is only acting as their agent. If this is one of those rogue strata managers deceitfully trying to hold on to clients, please take them on and good luck! Answer: James Moir, JS Meuller & Co Lawyers

Q

I want to do some partitioning work in an office lot, which I believe is a complying development. I know that the effect of the case of Owners Strata Plan No 50411 & v Cameron North Sydney Investments Pty Ltd [2003] NSWCA 5 means that a development application under s 78A of the EPA Act does not require the consent of the owners corporation if the development is wholly within the lot. But does that also apply to complying development applications under s 85A of the EPA Act? Because, s 4(1) of the EPA does say that “”development application” means an application for consent under Part 4 to carry out development but does not include an application for a complying development certificate.”

Also, clause 3 of schedule 1 of the EPA Regulations does say: “An application for a complying development certificate must contain the following information... (e) if the applicant is not the owner of the land, a statement signed by the owner of the land to the effect that the owner consents to the making of the application,” So it seems that, according to the Cameron case, if one wants to apply for a complying development certificate for works that will occur entirely in the lot and not on the common property then “owner of the land” referred to in clause 3 of schedule 1 is the owner of the lot and therefore consent of the owners corporation is not required. Would that analysis be correct?

A

If the works are wholly within your lot, I can’t see how you need Owners Corporation approval to lodge the complying development application. It would be the same rules as for a DA. The Owners Corporation can object, but isn’t the owner of the land, so it’s

consent to the application is not needed. Making councils understand this and depart from their usual procedure (requiring owners corporation consent) might be harder. Answer: James Moir, JS Mueller & Co Lawyers

Q

Say when you bought the unit you get the management statement and other by-laws But what about a document they were supposed to give to you? Maybe it was a subsidiary body that didn’t pass on the information or the owners corporation failed to notify. Does it not apply to you, does it become void? Obviously, if this was a major omission I could see it causing a big issue, but let’s say it is something smaller like a rule against hanging your clothes outside, or playing music at certain times. So then if you are in breach are you really if the rules hadn’t been given to you? Or if you bought something to use but then you find out you would be in breach of the rules if you used it. Could you get your money back because the owners corporation failed to notify you of the rules like they were supposed to? How does that work? I’m trying to figure out the NSW legislation on this.

A

I assume you are talking about by-laws ? By-laws are not effective until registered. And once registered, they are shown on a search. A search of the common property title shows all registered special by-laws, and the solicitor/conveyancer acting for the purchaser should check they are all there and tell their client about them. If the by-law was registered but wasn’t in the contract, the purchaser should have noticed and is bound by them. Even if it has been passed but not registered, the purchaser is bound. They should have done a strata search and seen minutes from the last EGMs and AGMs. If it’s not a by-law or not registered, then the person is not bound. In strata schemes, “policies” and “rules” do not bind anyone unless and

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until they are registered as by-laws. Answer: James Moir – JS Mueller & Co Lawyers

Q

On Friday morning suddenly there was some dirty/ sewage water coming out from the sewer or drain inside my bathroom and a couple minutes later flooded a decent area of carpet. I called the strata after hour service and they sent a plumber to my home to try and find out what’s going on. By the time the plumber arrived the flooding had already stopped and everything was back to normal. I took plumber down to the car park to have a look and he planned to cut through the sewer and use high pressure water gun to clean and clear the sewer. Due to carpet being flooded by the dirty water, I had already called someone to come and restore the carpet. The bill was $803.Today the strata manager gave me

a call and told me the strata won’t pay the carpet restoration costs because it was not their fault. And the strata manager told me that she had experienced this problem before and she had to pay money out of pocket. The strata manager told me if I want to she can create some notes and she will let the EC decide at the next general meeting if they should pay for my carpet restoration. She even told me that if the EC is going to ask her opinion, she is going to say no. We didn’t cause the sewer/drain to get blocked and flood our carpet so why should we pay? If the sewer on common property was blocked, that is the strata’s responsibility. Should I take legal action to get my money back?

A

The carpet is lot property, not common property. Therefore you are to replace it. However, its pipes are common property. Defective common property has damaged your lot property, therefore you can recover the cost of repairing or replacing your damaged lot property from the owners corporation. You should demand that cost from the OC. You can sue them in the Local Court (Small Claims) if they don’t pay. Answer: James Moir, JS Mueller & Co Lawyers

Q

I reside in a unit block that has no onsite parking for visitors. This poses a problem when tradesmen and community workers attend the site. There is a designated place where one vehicle could be parked but the EC has determined that this is only for

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tradesmen. Would the exclusion of a care worker be deemed to contravene the Anti-Discrimination Act?

A

Generally speaking, under the Anti-Discrimination Act 1977 it’s unlawful for an employer to discriminate against their employee on the grounds of their responsibilities as a carer. Similarly, it’s unlawful for a principal to discriminate against their contract worker. If a contract exists between the owners corporation (as principal) and the carer (as contract worker) there might be an issue. On the other hand, assuming that the designated area is common property and that there is no exclusive use by-law granting an owner or owners exclusive use of that area, the strata law states that a lot owner has a right not to be excluded from that area of common property: Lin v The Owners - Strata Plan No. 50276 [2004] NSWSC 88; Platt -v- Ciriello [1998] 2 Qd R 417.Answer: Michael Pobi, Pobi Lawyers

Q

Recently we found out that one owner installed a second toilet in their laundry on the ground floor. I am wondering what kind of approval was required for them to do that. It seems nobody knew about it except one owner because the pipe had to go through their garage. Approval of Owner Cooperation? Approval of council? Certification of construction engineering? Certification of plumbing? Will it effect the building insurance? etc. Could we just simply report to council, for further investigation?

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Assuming that common property in your strata scheme is where it would usually be, then the installation of a toilet and associated plumbing would certainly require at least approval of the owners corporation by a special resolution under section 65A of the Strata Schemes Management Act 1996 and/or a by-law. The approval of the Consent Authority (usually Council) would be a likely requirement also (such as under a Development Consent) but answering that question can be a complicated exercise in planning law. An engineer’s certificate would be a possible requirement imposed under a Development Consent (and perhaps a bylaw too). The plumbing would generally need to be signed of in accordance with the relevant water board’s requirements. Unauthorised or illegal works can affect the building insurance in many ways. The answer to this requires a thorough review of the policy terms and conditions. If the issue is works done without required Development Consent then Council may well be willing to inspect and perhaps issue an order. Council as always might also use the opportunity to inspect other aspects of the building, such as fire safety compliance, which should be kept in mind. You can also consider seeking orders from a strata schemes adjudicator (preceded by mediation through Fair Trading) in a variety of respects. Ultimately unauthorised works matters are often resolved by the parties agreeing to the terms of a by-law that would impose various obligations, including the need for compliance with planning law. You should of course consider taking legal advice. Answer: Daniel Russell, Chambers Russell Lawyers.

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LICENCED TRADIES

The Importance of Using Licensed Tradies Steve Ellis from Result Trade Services warns against DIY plumbing and electrical By Steve Ellis

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ith the increased costs of living these days, plus all the renovation “reality” shows like The Block, there is a surge in property owners undertaking their own repair and maintenance work. This can be life-threatening in regards plumbing and electrical work. For some trades like plastering, tiling and painting, it is reasonable to expect that people will “give it a go” themselves. People are taking on potentially life risking work like plumbing and electrical work and it is a real concern that home renovators could be putting themselves and their houses at risk. Plumbers and electricians are highly skilled trades that provide a crucial service for the residential, commercial and industrial sectors. All related work needs to be to the highest standard as plumbing and electrical typically affects public health and safety, specifically the potential for the contamination of drinking water supplies and electrocution. Plumbing work can encompass a broad range of tasks including water supply, drainage, sewage, heating, cooling and gas fitting. Specific elements that are typically fitted by a plumber include water pipes, taps, sinks, baths, showers, hot water systems and elements of a property’s drainage and sewage system. Electricians are generally responsible for lights, power and communications in your home.

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Common Plumbing and Electrical Problems: Some of the most common problems around the home are related to plumbing and electrical issues. This includes the following commonly encountered situations, which typically require the services of a licensed plumber or electrician: • Leaking taps • Leaking toilets • Faulty hot water systems • Leaking roof • Blocked drains • Bathroom renovation • Gas appliance installation • Burst water pipes • Light replacement • Appliance installation • Power point relocation • Smoke detectors • Security systems • Ceiling fans • Phone lines • Gas point installations Licensed plumbers and electricians: Only licensed contractors are authorised to carry out plumbing and electrical work and ensure that all the work under their control complies with all the relevant standards and regulations. If you are unsure if your tradie is licensed ask to see some proof of this or contact your local State Authority. Licensed plumbers and electricians are required to complete extensive on site experience, attend very intense training

courses at TAFE and other training organisations. All work shall comply with the Australian Standard of AS3500 and AS3000. There can be very costly mistakes made and often it cost more to fix up others problems than it would have cost in the first place to get it done by a reputable licensed tradesperson. For more information, call Result Trade Services on 1300 780 760 or visit our website www.resulttrade.com.au


Exclusively Strata, it’s our policy.

Strata Insurance Specialist Call us today 1300 361 263 or visit www.chu.com.au


A NICE WAY TO SHOP - LONGTON

A new way to shop for your dream apartment One-stop lifestyle store opens in the CBD

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property developer has opened a concept store in the heart of the Sydney CBD selling exclusive lifestyle products and technology as well as luxury apartments. Longton Lifestyle Hub in George Street showcases locally and internationally-sourced homewares, giftwares, accessories, artworks and gadgets within an apartment setting. Adding further lifestyle value will be Longton-developed technology such as iButler, iCommunity and iSwitch. The lifestyle collections include: 100 StrataLive Summer 2013

• Utility & Utopia by Pia Wüstenberg (Finland) • EK Design by Katharina Eisenkoeck (England) • Progetti (Italy) • Nasonmoretti (Italy) • Eclectic by Tom Dixon (England) • Lunares (Mexico) • Fink (Australia) • Martha Sturdy (Canada) • Artisans Connect (South Africa) • Normann Copenhagen (Denmark) • Eva Solo (Denmark) • Architect Made (Denmark)

• Gaia & Gino (Czechoslovakia) “Longton Lifestyle Hub is a holistic way of bringing beauty and innovation to the people of Sydney,” said Mark Dennis, the Director of Retail and Branding at Longton. “Our aim is to inspire people to surround themselves with beautiful and innovative objects that will enhance their lifestyle. We will also introduce them to technology that will make their lives more secure and give them more leisure time.” Longton is undoubtedly Sydney’s most free-thinking developer, and its Lifestyle Hub will make apartments and


A NICE WAY TO SHOP - LONGTON

relaxed living more accessible to busy city workers who can inspect the display during their lunch breaks rather than wasting their weekend leisure time. Scale models and floorplans of the company’s apartments are showcased, with realtors assisting with specific details. This year Longton launched two luxury residential developments, Avantra apartments at Mascot and Uptown apartments at Roseville, which feature an electronic concierge service called iButler, a home-automation service called iSwitch, and a dedicated social media network called iCommunity. The CEO of Longton, Steven Yu, said the company slogan, ‘No respect to status quo’, summed up its desire to be trendsetters in the local market. “We strive to set trends, not follow them, so we create Australia’s most advanced apartment buildings,” Mr Yu said. “The last thing we want is to offer a similar style of development to the runof-the-mill, so we search the world to source the best technology, services and homewares. If we can’t find what we want then we create it ourselves. Our clientele is astute, so we have to give them top quality appointments and finishes, which we do at excellent value.” Longton Lifestyle Hub at Shop 1, 413 George Street is open daily. For information about Longton’s apartments developments go to: www.avantraicommunity.com.au and www.theuptown.com.au StrataLive Summer 2013

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ELIZA APARTMENTS

Sydney’s prime property when compared to Lon By Barry Hyland

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wo prime apartments overlooking Hyde Park – one in Sydney, the other in London – reveal that local property is not expensive by world standards. The new Eliza apartments in Elizabeth Street are one-fifth the price of apartments at One Hyde Park, London. Both are in similar prestigious locations with panoramic views of the verdant parklands, and offer opulent inclusions. The full-floor, four-bedroom apartments in Eliza (200sqm) are $A4-M to $A5-M (around $A20,000 per square metre), while one-bedroom apartments in One Hyde Park (93sqm) are reported to be $A10.70-M, or around $A115,000 per square metre. “Apartments at One Hyde Park are reported to be showing extremely strong capital growth which emphasises the importance of a prime location,” said Edward Doueihi, the founder of Ceerose which is developing Eliza. “Eliza is a ‘blue chip’ building in Sydney’s dress circle that captures a similar exclusivity and sophistication as One Hyde Park in Knightsbridge, so we expect capital growth of Eliza will be more pronounced than for other Sydney locations.” Every apartment in Eliza is finished to the highest level of detail, with a fireplace, full-height timber-panelled walls and electronically-controlled curtains. Kitchens have limestone floors, calcutta marble benchtops and splashbacks, and a walkin pantry. The appliances are the finest money can buy, including a hand-crafted stove, oven, rangehood, dishwasher and microwave from Gaggenau. The fully-integrated fridge is from Liebher, the double bowl sinks from Abey Quadrato, 102 StrataLive Summer 2013

and the tapware from Gessi Rettangolo. Some kitchens even have a butler’s pantry and a separate preparation area for catering purposes. Bedrooms are whisper-quiet havens with walk-in dressing chambers and ensuites swathed in travertine and bedecked with fittings from Gessi Rettangolo and Villeroy and Boch. Even the laundry has marble benchtops. A feature of many apartments is a wintergarden, which acts as a climatic buffer zone. Glass concertina doors slide the full length of the balcony, giving residents an adaptable space; open them partially to gain the easterly breeze; open them fully to create a larger outdoors area; or keep them closed to maintain comfort and privacy. The foyer at Eliza is as stunning as the apartments, with a bespoke sandstone wall curved like a crashing wave, limestone floors, laser-cut timber screens and onyx-clad lifts. Eliza, at 141-143 Elizabeth Street, should be completed by the end of this year. A full-floor apartment can be inspected from 11am to 12-noon on Saturday. Further information is on: www.elizasydney.com


ELIZA APARTMENTS

is a bargain . . . don

THE WEST WING COMES TO SYDNEY The Eliza apartment building has already raised architectural eyebrows with its serpentine-shaped facade, but an interior design innovation is also capturing attention. Each full-floor apartment has a self-contained ‘west wing’ ideal for accommodating in-laws, grown-up children and guests. The separate ‘wing’ has a large bedroom, en-suite and living area which can be used as a study or office. It is on the western side of each apartment and gains natural light through a glass atrium which has a nine storey-high wall of evergreen climbing plants. The ‘west wing’ is around 50 square metres, virtually soundproof, and can only be accessed by a security lift which opens onto a private vestibule. “I have one high-profile businessperson interested in an apartment at Eliza because he can transform the ‘west wing’ into an office and maintain professional appearances, separate from his living quarters,” said Hamish Robertson of McGrath. It also is understood a female fashion designer is considering setting up the ‘west wing’ to privately showcase her creations. “The location of Eliza is perfect for someone who works in the city or has clients in the CBD,” said Ged Rockliff of Savills. “It is next to the Sheraton On The Park and is in the heart of the shopping precinct.” Irene Lau of Savills says her Asianbased clientele are impressed with the five levels of private car parking at Eliza. “There are two side-byside parking spaces with direct lift access for each full-floor apartment, so residents can come and go discretely,” she said. “Many affluent people cherish their privacy and security.” Eliza, at 141-143 Elizabeth Street, can be inspected from 11am to 12-noon on Saturday. Further information is available at: www.elizasydney.com

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ELIZA APARTMENTS

By Barry Hyland

104 StrataLive Summer 2013


ELIZA APARTMENTS

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uilding in the CBD has never been more difficult than at the landmark Eliza, which is on a site no bigger than a Paddington terrace. Hemmed in by tall buildings and constricted by CBD congestion, innovative developer Ceerose certainly had to think ‘inside the square’ when excavating the confined 290sqm block in busy Elizabeth Street. As tricky and painstaking as the 12-month excavation was, it was nothing compared to the conundrum of how to lift the heavy digging machinery from the 25-metre deep pit. The answer was by crane, as this remarkable photo on the left shows. Safely burrowing down six levels without undermining neighbouring foundations - such as the five-star Sheraton On The Park - was an engineering and logistical triumph, made all the more meritorious because Council restricted working hours to between 10am and 3pm. Two excavators dug the hole, progressively tipping the rock and rubble into a heavy metal bucket which was hoisted onto a cantilevered platform at ground level. The contents were emptied into the back of a waiting truck, then the bucket lowered for the process to start again. Finally came the moment of truth – lifting the two diggers from the hole they had created. Ceerose obtained Council permission to bring in a 300-tonne crane and to partially close Elizabeth

Street from 5pm to 2am. With just millimetres to spare, the lift was achieved as the city slept. “It was the most stressful four hours of my life . . . and that includes being at the birth of my three children,” said Edward Doueihi, who founded Ceerose in 1998. Fortunately the effort has paid off. Eliza is leading Sydney into a curvaceous new architectural era of complex shapes and fluid geometrics that should spell an end to the box-like apartments of the past. Every floor is a different shape and each apartment is bespoke. “We wanted to avoid the uniformity of most Sydney apartment developments, so we engaged Tony Owen to design a building that shakes up prevailing architectural standards,” said Eddie. “We believe Eliza is the finest residential development in the CBD, and we hope it emboldens other developers to be more adventurous.” Across the other side of the city, Eddie is undertaking another challenging project with great architectural flair. Harbour Mill at Pyrmont is a redevelopment of the historic Edwin Davey Flour Mill which ceased production in 1996 and fell into disrepair. Only a portion of the 117-year-old facade remains – a sad testimony to Sydney’s once thriving industrial era. Luckily Eddie is breathing new life into the remnants, which are at the junction of Allen Street and Jones Street, and clearly visible to motorists using the Western Distributor. Preserving as much of the mill’s history as possible is a priority for Eddie,

who has a connection to the flour mill dating back to when he was a child. His father ran a bakery in Cowper Street, Granville, and he’d often take Eddie to the mill to collect supplies. “I’ve been emotionally attached to the mill since my childhood,” said Eddie. “Unfortunately most of it burnt down before I could buy the site, but now that I own it I’m building something that reflects the mill’s proud history and my fond memories.” An integral feature of the design is restoring the remnant facade, and integrating it with the new structure. Balconies on some of the 136 apartments will sit behind the remaining walls, giving occupants a sense of history as they look out through the heritage windows to the north, east to the city and west across Wentworth Park. Subtle references to the mill’s history are carefully interwoven into the new building, such as the 19th Century styling of the new bracing struts to reinforce the existing façade. The facade of the new structure will be built from large sliding panels which reference the warehouse and industrial heritage of the area, and which offer excellent environmental performance. “Blending the old with the new will give us an architectural point of difference over most other residential developments,” said Eddie. “We’ll pay further tribute to the mill’s history by displaying photos and storyboards, and by integrating public art into our heritage interpretation strategy.”

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THE NAME GAME

The Name Game By Barry Hyland

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evising the most appropriate name for a residential project is becoming almost as difficult as gaining approval to build it. Not only does the nomenclature have to position the development correctly – be it prestigious, middle-ofthe road or budget-priced – it has to be memorable... or, at the very least, unlikely to be confused with a competing project. It’s easier if the site of the project has historical significance, such as ‘The Goldsbrough’ (Mort), ‘The Piano Factory’, ‘The Finger Wharf’, ‘The Stables’, ‘St Patrick’s Estate’, ‘The Biscuit Factory’, ‘Quarry’, ‘Distillery’,

106 StrataLive Summer 2013

‘Stonecutters’ or ‘Sugarmill’. In the early days of project marketing it was just a matter of calling a development after the street or suburb in which it was being built, followed by an attempt to describe its best feature. Many tried Views or Mews, Cove or Grove, Cape or Gate. There also was Tower, Terrace, Gardens, Grand, Green, Quays, Harbour, Bay, Waters, Woods, Court, Manor, Square, Way, Estate, Villa, Vista and Village. Ps were also popular: Place, Point, Plaza, Park, Palms, Pacific, Pavilions and Peninsula. But the plethora of apartment developments since the 1990’s has made

originality much more difficult, hence the plagiarism of international icons – Waldorf, Astor, Chelsea, Regency, Ritz, Palladium, Harvard, Lexington, Dakota, Hudson, Madison, Central Park and The Hamptons – or cities/states: Riviera, Sienna, Monte Carlo, Monterey, Monaco, Trieste, Santa Monica and Sorrento. Descriptions indicating a development’s location are always popular. We’ve had ‘Coast’, ‘Salt’, ‘Eyrie’, ‘North’, ‘Treetops’, ‘Waves’, ‘Breeze’, ‘Sundown’, ‘Vantage’, ‘Rise’, ‘Shoreline’, ‘Water’s Edge’, ‘Shore’ and ‘Ocean’. So too are pretty names, with ‘Elysium’, ‘Silk’, ‘Haven’, ‘Reflections’,


THE NAME GAME

‘Azure’, ‘Allure’, ‘Eden’, ‘Lanai’, ‘Cascades’, ‘Cadence’, ‘Jade’, ‘Evolve’ and ‘Sanctum’ springing to mind. Marketers have tried to convince buyers their developments are special by using bold positioning statements masquerading as names, such as ‘Prominence’, ‘Pinnacle’, ‘Peak’, ‘Precision’, ‘Paramount’ and ‘Platinum’. What is it about Ps? To add a touch of intrigue some developers opt for a foreign name, ala ‘Le Maison’, ‘La Vista’,‘Beau Monde’, ‘Etage’, ‘Avante’, ‘L’Espace’, ‘Cote d’Azur’, ‘Loggia’ and ‘Lumiere’. Others have been influenced by a famous artist: ‘Mondrian’, an architectural movement:

‘Rococo’, or a political ideology: ‘Republic’, ‘Union’ and ‘Dominion’. Architects always want to leave their ‘signature’ – yet another well-used name for an apartment complex – so we have buildings called ‘Alcove’, ‘Atrium’, ‘Aspect’ and ‘Symmetry’. The more mathematically-minded have given us ‘Infinity’, ‘Axis’, ‘Equinox’, ‘Vortex’, ‘Alchemy’, ‘Axiom’, ‘Nexus’, ‘Quadrant’, ‘Coda’ and ‘Latitude’. For a while marketers opted for prosaic names, such as ‘Base’, ‘Grid’, ‘Tin Shed’, ‘Zone’ and ‘Zinc’. They have started to come back into fashion, with such down-to-earth names as ‘Henry’, ‘DNA’ and ‘Erko’.

When imaginations are allowed to run wild we end up with such mangled monikers as ‘C’, ‘Advanx’, ‘E-Pad’, ‘Modus’, ‘Glo’, ‘CeVu’, ‘Q1’, ‘Edo’, ‘Aero’, ‘Skye’, ‘W5’, ‘VSQ’, ‘Kay-YeMy’, ‘Futra’ and ‘Wondakiah’. One of the more unusual names for a contemporary building is ‘Scout’. I had presumed it must have been the site of a former Scout Hall, but when I asked the developer he simply shrugged his shoulders and said the name bore no relevance to anything; it had been conceived on a whim. And what about ‘Viva’? Surely this should be located in Las Vegas, not Top Ryde. For some developers the name game has proven too difficult, opting out with such lacklustre efforts as ‘Northview’, ‘Epping Park’, ‘Emerant Lane’, ‘The Terraces’, ‘No. 17 Danks Street’, ‘41 Birmingham’ and ’10 Wylde Street’. How unimaginative! I’ve been involved in suggesting names for residential developments for the past two decades, with limited success. So, to those developers struggling for an original name for their next masterpiece, I’m happy to throw in these rejected gems: ‘Utopia’, ‘Tranquility’, ‘Serendipity’, ‘Serenity’, ‘Homage’, ‘Monogram’, ‘Rhapsody’, ‘Cherub’, ‘Spirit’, ‘Sunburn’ and ‘Gossamer’. I still can’t understand why they haven’t caught on. StrataLive Summer 2013

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A SMOOTH MOVE - NSW FAIR TRADING

How to Make it a Smooth Move One of the biggest complaints we get at Stratalive is about dodgy removalists.

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SW Fair Trading has produced a new fact sheet on removalists and has released five-year figures showing consumer complaints and enquiries about the industry remained constant. The most common complaints relate to loss of damage to customer’s property or dissatisfaction with the service and pricing or charges. Movers can be shakers. Damage to goods during a move causes consumer distress and dissatisfaction.  Fair Trading can help negotiate disputes between consumers and removalists. NSW Fair Trading Commissioner Rod Stowe said consumers were protected by the Australian Consumer Law and should call Fair Trading on 13 32 20 for help with any problems. “Good industry participants benefit from Fair Trading compliance and enforcement action and dispute resolution in the industry,” he said. THE NEW FACTSHEET Hiring a removalist While no one enjoys the hassles associated with moving, there are certain things you can do to help ensure your move runs smoothly.  Before hiring a removalist, make sure you shop around and compare a few services first.  Take the time to thoroughly research your options so that you can be confident you are getting a quality removalist service for the right price.  You may like to: • read through customer reviews on

108 StrataLive Summer 2013

independent websites to help you compare • ask friends and family to recommend a reputable removalist, one which they or a friend of theirs have used and were happy with • check whether the removalist is accredited by the Australian Furniture Removers Association (AFRA) Australian Furniture Removers Association (AFRA) Removalists who are accredited by AFRA must meet certain standards in relation to equipment, vehicles, premises and staff training needed to complete a professional move. Questions to ask before you hire Before you hire a removalist, find out about their service by asking some simple questions, such as: What is the total cost of the move? What exactly is included in the cost? Do they charge by the hour or is it a flat rate? Are there additional costs you may need to factor in? How long will the move take? If there are any delays on the day, is there an extra cost involved for storage? QUOTES AND CONTRACTS Quote Always ask for a written quote before hiring a removalist company.  To help the removalist provide you with an accurate quote, make sure you provide them with detailed information about your moving

needs. Ensure the quote provided is itemised and the removalist can account for every charge.  If something is not clear or you require further information about certain charges, make sure you receive clarification before accepting he quote. Contract As with any other contract that you may enter into, make sure you have read and clearly understand it. Ensure that the contract contains: • complete details of the service being provided • the pick up and delivery address, dates and times of the move • a household inventory of goods being moved (visit the AFRA website for an example of a household inventory list) • details of insurance for any loss or damage. Always read carefully the terms and conditions of any contract and check for hidden costs.  Be wary of pre-payment or providing credit card details upfront in case you need to cancel or change your mind. Removalist comparison website The Australian Removalists website allows you to easily compare quotes from removalists in your chosen area. http:// www.australian-removalists.com.au/ You can request quotes from a number of removalists by: • selecting where you are moving from • selecting where you are moving to • completing a request form.


A SMOOTH MOVE - NSW FAIR TRADING

The companies will then directly contact you via email or telephone and provide you with a customised quote. Insurance on your move It is worthwhile to arrange insurance for your move to cover your household goods in case of damage or loss. Removalists are not required by law to provide insurance for your things during a move.  Most removalist companies

only have insurance that covers their vehicle if an accident occurs. However, if the removalist company is accredited with AFRA, they will have Public Liability Insurance and are authorised to provide transit insurance for all goods being moved. Transit cover insures your goods while they are being packed and moved by removalists, including any storage in the course of the move.  If your goods need to be stored, you can extend your transit insurance to cover those goods during the storage period.  This however will attract a separate premium. If you are having problems If your move does not go to plan or you are not satisfied with the service that you have received, the first step is to make every effort to sort out the problem directly with the removalist. State what the problem is and how you would like it fixed.  Make sure you

put all your concerns in writing and keep all relevant documents such as signed contracts, receipts and quotes. If you do not reach a satisfactory outcome, contact NSW Fair Trading on 13 32 20.   You can also make an enquiry or lodge a complaint via our website.  We provide free information about your rights and options to solve the dispute. Well-informed consumers have a far better chance of successfully asserting their rights. And lastly… Always let your building know when you are moving in. This particularly applies to larger buildings so they can protect their lifts and have someone there to oversee the move.

For more information visit www. fairtrading.nsw.gov.au StrataLive Summer 2013

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CONVERTING COMMERCIAL SPACE

Converting commercial space into strata apartments By Barry Hyland

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roperty experts agree that the value of commercial space has diminished in recent years, and there is little chance of a market pick-up based on workplace trends. This is particularly applicable to older style buildings in non-core business districts which may also have significant unfunded maintenance liabilities. In contrast, residential apartments are in great demand, and the space can be anything up to four times as valuable. Developers are paying handsomely for residential sites, particularly in Sydney. So, what is the process to achieving a profitable commercial-to-residential outcome? The short answer is that there are many steps, they take a long time, and they invariably cost a significant amount of money. But, they can be financial rewarding to owners of the strata commercial space.

The steps (in a nutshell): 1. Liaise with fellow strata owners. If the idea meets broad agreement then put the matter on the agenda for the next Annual General Meeting, or call an Extraordinary General Meeting of owners. 2. Determine if there are any owners (at the AGM/EGM) opposed to the idea. Because such a major decision currently requires 100% agreement there is no point in trying to move forward unless there is complete support*. If the owners unanimously agree in principle, then: 3. Get the owners to agree to fund a feasibility study - $15,000 should cover this. 4. Set up a working committee, reporting to The Executive Committee. 5. Select a project manager, who will engage an architect, a valuer, a town planner and a consulting engineer to conduct the feasibility study. Is adaptive re-use of the existing structure economically feasible or is it more sensible to demolish and re-build? The project manager will obtain cost and time estimates to achieve Council approval of the preferred option. 110 StrataLive Summer 2013

6. Decide if the initial findings warrant pursuing. Does the new scheme comfortably exceed the property’s current value? Is there sufficient profit margin to interest a developer? If so, determine the value of each owners’ suite, with and without Development Approval. 7. Call an EGM. Determine that each owner would sell their strata commercial suite for the nominated price (this would be calculated on a rate per square metre) and, where applicable, contribute to the DA and marketing costs. 8. Get a legally binding agreement from all owners that they will sell if a developer was willing to pay at least the minimum amount decreed. This is where hard decisions need to be made, and owners should be aware of the various options. Nick Ridgwell, who heads up Resolute Property Services, has guided Owners Corporations through the tricky and tedious process. “An Owners Corporation can proceed to lodging a Development Application themselves,” explains Mr Ridgwell. “A significant DA can cost upwards of $400,000 and take nine months... and that’s if things go smoothly. The upside is that with an approved DA the site is almost certainly going to be more valuable, and more attractive to developers.” To go to DA or not. That is the question? “By knowing the approximate costs owners can determine their pro-rata levy to fund this DA process,” said Mr Ridgwell. “At this stage owners can decide if they are prepared for the expense, or offer the site to a developer as is.” If the owners agree on the latter course there are two methods commonly used, Mr Ridgwell explains: 1. Go to tender, or identify a developer, and sell the property provided the offer meets or exceeds a predetermined price. “This option for owners is the least complicated and risky, but it also means the lowest price as the developer will incur substantial expense in pursuing the DA and the associated risks,” said Mr Ridgwell. 2. Conditional contract. “This is a binding obligation on the


CONVERTING COMMERCIAL SPACE

Before

After

developer to buy the site if the conditions are met by the sunset date – in this case, getting the DA,” said Mr Ridgwell. “Owners should be specific about what the DA should deliver and the timeframe in which it should be achieved so owners can be comfortable the developer is actively trying to buy the site and not just lock up their asset.” “In all cases it is necessary for all owners to be locked in to a legally binding agreement to sell, and to demonstrate that vacant possession will be available from a certain date,” said Mr Ridgwell.

* Early next year, the Minister for Fair Trading, Anthony Roberts, will present to Parliament a new set of rules and regulations covering strata laws. Among them is the potential reduction from the need for a unanimous vote of all owners to a percentage vote, which could be as low as 75%.

Resolute Property Services, Suite G, Level 16, 171 Gloucester Street, Sydney 2000. Nick Ridgwell: (0408) 418 642 StrataLive Summer 2013

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SOCIAL MEDIA JUST FOR STRATA?

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Hold live discussions, manage events, vote in polls.

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Store & share minutes, plans, budgets, videos, photos & more!

communication tool for your strata community. Whether you’re a professional strata manager or a lot owner in a self-managed scheme, you’ll love our Strata Pages. Now that is a revolution!

Start the journey at housenet.com.au/strata w w w. h o u s e n e t . c o m . a u And while you’re there download our FREE E-Book ...

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s e r a sh ion s e t l Schomy pass

Manu Feildel - Chef


An award winning strata specialist that you can trust. A large team of qualified staff painters; enabling us to complete your job on-time and with the quality workmanship that you expect. Strata specialists; all interior, exterior, high rise, lead management, Handyman, line marking, maintenance services provided. Commercial & institutional experienced: We are preferred painters to the Historic Houses Trust of NSW. A proven record, over 18 years, of delivering exemplary service.

Our job is not complete until you are satisfied. Contact us today for your next strata project.

1300 916 291 enquiry@premierpainting.com.au Awarded and commended by Dulux Accredited & Master Painters Associations.

Commercial Cleaning Services We specialise in residential complex common area cleaning services for all types of buildings – from 40 units through to 400 units or more. We provide a full suite of common area cleaning services – daily cleaning services, steam cleaning carpets, window cleaning – for further details contact us. Why A Clean City? • Established since 1986 – proven track record of consistent high quality services • Hands on management team – single point of contact for property/strata manager - value add approach to service delivery • Communication about issues/items requiring attention (i.e. repairs etc) • Personalised style of service – changing of light globes, arranging removal of dumped household rubbish, meeting other contractors as required • Consistent quality control - periodic inspections undertaken • Competitively priced

See what other clients say... acleancity.com.au A CLEAN CITY - MASTER LOGO

Contact Us 36 Chapel Street, Marrickville NSW 2204 P: (02) 9550-2423 (24/7) F: (02) 9550-2923 E: lauretta@acleancity.com.au W: acleancity.com.au

Commercial Cleaning Services Since 1986 CMYK 100 68 0 12 PMS 287 C RGB 0 75 147

A Clean City have been undertaking works for over 7 years on a number of properties that are managed by Jamesons. The clients are impressed with their quality control and suggestions they provide that can enhance the property Michael Vumbaca Jameson’s Strata Management


CONTROL YOUR PESTS We have highly qualified professionals from all areas of project management, maintenance, cleaning and construction who are experts at what they do.

BOTH RESIDENTIAL & COMMERCIAL Specialising in Termite Control Single-story house Normally $367

It’s little wonder we’re so popular with our clients, including NRMA, Kmart and Red Cross. We have offices in Qld, NSW and Vic.

209 249

$ $

inc GST

Double-story house inc GST Normally $409 Quote STRATALIVE to qualify for these great offers Platinum Pest Treatment Includes: • Brown Ants (INDOORS • German Cockroaches • Black Ants ONLY) • Oriental Cockroaches • Australian Cockroaches • • American Cockroaches • Carpet Beetles • Garden Spiders • Wasps • Black House Spiders • Either Mice • Daddy Long Legs or Rats

Termidor Ant Control As low as

$

80

6 month warranty applies* see below conditions

Quote STRATALIVE

For outdoors and nests Normally $169 For a standard inc GST sized house

LIKE US ON

RECEIVE FUTURE DISCOUNTS

WE ACCEPT CHEQUES, CASH & CREDIT CARD

Termite Alert Inspection

219

$

Normally $279

Comprehensive inspection and report inc GST Quote STRATALIVE

*Termidor special only valid if used in conjunction with general pest and platinum treatments seen in brochure. This treatment is an addition for total black ant control and comes with a 6 month Warranty. (Internal and external warranty applies.

www.pestfreesydney.com.au

FREE CALL 1800 15 30 10


ABN lift consultants Elevation by Design.

Sir Issac Newton was once asked how he discovered the law of gravity. He replied;

“By thinking about it all the time.� Thinking. We do a lot of it. As vertical transportation evolves and is driven by innovation, your lift related project must compliment architectural vision whilst meeting the many risk, compliance and performance benchmarks. From complete lift replacement projects and health and environmental assessments; to lift interior design, performance audits and maintenance contracts. We know the technology, and we know the demands. It took an apple on the head to spur Sir Issac Newton’s thinking; today your thoughts on vertical transportation need only gravitate to ABN Lift Consultants.

www.abnlift.com


Our Ideas, Your Home www.aristonbrand.com Italy’s number 1 brand When you find something you love and trust, stick with it - I have used Ariston for 10 years now, both in my cooking school in Fenix and in my own home I trust Ariston.

5yr warranty on all cooking & Aqualtis laundry appliances Available from Selected retailers Please see our website for details

www.aristonbrand.com


The world’s first Wall Mount BBQ What makes Smart so good? • Compact & Stylish • Fold away • Easy to clean Technical Specifications: Model No. Voltage Frequency Total Rating Amps Dimensions Open (W) x (D) Dimensions Closed (W) x (D)

• Easy Installation • 10amp GPO • Infinite Heat Control

WM700EW 230-240v 50/60 Hz 2400 watts 10 1450mm x 510mm 740mm x 510mm

• Marine Grade Stainless Steel • Made in Italy

See our full Demo at

MyAlfresco.com

Showroom – 40-44 Mark Anthony Drv, Dandenong Sth

Phone (03) 9768 0823 or visit www.myalfresco.com

My

.com


Stratalive Summer 2013  

In this edition we get the industry's take on the new strata reforms.

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