NSW Owners Corporations, Security Systems and Privacy – What do you need to consider?

 With increasingly sophisticated security systems having more capacity at a lower cost than ever before many strata and community title schemes are installing security systems and surveillance devices such as keyed swipe passes, smart lighting and closed circuit television (CCTV) systems. What many schemes do not consider is the use of these systems and their legality. Privacy is, rightly, a key concern of many lot owners and occupiers.

The Right to Privacy … is limited

Unfortunately, in NSW there is no general common law right to privacy. There have been two High Court cases where the existence of such a general right was discussed and held not to exist. Although the High Court in Australian Broadcasting Corporation v Lenah Game Meats [2001] HCA 63 left open the development of a concept of common law privacy a general right to privacy has not been established. There is however legislation that should be considered when an owners corporation wishes to install any surveillance system.

The Strata Schemes Management Act 1996 (NSW) (the Act) does not specifically address the power of an owners corporation to install security systems on the common property. However, an owner corporations can, and should, use its power pursuant to section 47 of the Act to pass a by-law regulating the installation, maintenance and operation of any security system (including any surveillance system).

The Surveillance Devices Act 2007 (NSW) (the SD Act) regulates the use of listening and surveillance devices. While there is a general prohibition on the use of listening devices to record private conversation, section 8 of the SD Act does not prohibit the use of optical surveillance devices (think CCTV) provided that there is either express or implied consent from the owner of the land on which the device is installed.

Note that if the common property, or part of it, is also used as a workplace say for a building manager, then the Workplace Surveillance Act 2005 (NSW) also applies and cameras must be clearly visible with signage warning of the surveillance at each entrance.

CCTV Systems

CCTV cameras that do not record sounds can be installed on the common property with the consent of the owners corporation however any recording of private conversations is not permitted. If your common property area is a workplace then all cameras need to be clearly visible and there must be signage advising of the system at each entrance. We recommend signage regardless as it can act as a deterrent.

We also recommend that the placement of any CCTV cameras is carefully considered. In one scheme, while there were genuine security concerns giving rise to the need for surveillance, one of the external cameras unfortunately captured a bedroom window which impacted on how the occupier used the room and caused the occupant serious (and justified) concern about why that camera had been positioned in that way. The moral is that camera placement should be carefully considered.

When installing a CCTV system, we recommend that the owners corporation needs to consider who has access to footage, where the footage is kept, how it is kept (i.e. is it securely held?) and the process for obtaining access to the footage and then to ensure this is encapsulated in a by-law in addition to authorising any necessary services agreements required to install, maintain and operate the CCTV system.

Swipe or Key Cards

While swipe cards or keys may not seem like a controversial security system, they can be. Take for example a strata scheme where the Chairperson decided to “police” the use of car parking lots and where the car spaces were held separately to residential lots with no restrictions on the use of the car space lots. In breach of the Act, the Chairperson decided that if the owners of the car space lots were not residents then they should not be allowed to use their car spaces. The Chairperson instructed the security firm to deactivate the key passes of the car space lot owners who were not residents preventing them from accessing their lots and any common areas of building.

In this instance a clearly worded by-law could have assisted by either setting out a process by which security cards could be de-activated or by establishing who had authority to instruct that security cards / keys be deactivated or restricted (preferably the strata manager or the building manager). Provided adequate controls were established in the by-law it should have been sufficient to prevent the misuse of the security keys.

If your strata scheme is considering installing a security or surveillance system then we recommend they seek legal advice tailored to its needs.

Allison Benson

Legal Practitioner Director

P: 02 4032 7060

E: allison@kerinbensonlawyers.com.au

Attention to Detail: The Importance of Compliance when Issuing Creditor’s Statutory Demands

The recent cases of Kisimul Holdings Pty Ltd v Clear Position Pty Ltd [2014] NSWCA 262 (Kisimul) and In the Matter of EGE Foods Australia Pty Ltd [2014] NSWSC 983 (EGE Foods) serve to emphasise the importance of compliance with legislative requirements when issuing and seeking to rely upon creditor’s statutory demands to wind up a company.

The Cases

In Kisimul, the petitioning creditor had failed to comply with s459E(3) of the Corporations Act 2001 (the Act) by failing to include a statement in the affidavits verifying two statutory demands that there was no genuine dispute about the debts owed by the debtor.

The creditor in EGE Foods had both failed to annex supporting documents to the statutory demand and to the affidavit verifying the statutory demand (though ultimately this was not found to be fatal to the creditor’s case) and had failed to comply with the requirements of the form prescribed by the Supreme Court (Corporations) Rules 1999 (NSW) by stating, in the affidavit verifying the statutory demand, that the debt was due and payable and that there was no genuine dispute as to the debt. The Court also discussed the issue of service, finding that ordinary pre-paid post encompassed registered post, and confirming the well-established precedent that the onus is on the debtor company to raise a doubt relating to the service of a statutory demand.

In both cases the statutory demands were set aside and the creditors not entitled to proceed with winding up proceedings against the debtor companies.

Reasons to Set Aside Statutory Demands

In Kisimul, the debtor company made an application pursuant to s459G of the Act to set aside the statutory demands on the basis that there was a genuine dispute in relation to the debts, that the debtor company had an offset claim, and for “some other reason” (being the lack of a proper affidavit) in accordance with s459J(1)(b) of the Act. The debtor company in EGE Foods had not made an application to set aside the statutory demand but the Court invoked its discretion under s467A of the Act to dismiss the winding up application that ensued.

In both cases, the Court found that whilst the absence of a properly completed affidavit did not of itself make the statutory demand defective, it prevented the creditor from relying upon the presumption of insolvency that automatically follows from non-compliance with a valid statutory demand. The creditors were thus prevented from winding up the debtor companies on the basis of non-compliance with the statutory demand.

To learn more about creditor’s statutory demands or legislative compliance with court documents, please contact either:

Allison Benson Angie Rennie
Legal Practitioner Director Lawyer
Ph: (02) 4032 7990 Ph: (02) 8706 7060
E: allison@kerinbensonlawyers.com.au E: angie@kerinbensonlawyers.com.au

What By-laws Apply to My Strata Scheme?

Many lot owners, particular those in older strata schemes, do not know what by-laws apply to their scheme. While the Secretary of the Owners Corporation is required to keep a record of all the by-laws in force in the scheme this record may not always be accurate.

Why? There was a change to the law on 1 July 1997 affecting strata schemes registered before this date. Also over time there is often ad hoc additions, amendments and repeals of by-laws by the Owners Corporation. If rigorous records are not kept, confusion ensues.

This is particularly so where there are several by-laws in respect of the same subject area, for instance where there are by-laws in respect of either works and/or exclusive use areas. It is relatively common for the beneficiary of an exclusive use by-law to want to add additional space or conduct additional works (requiring a second by-law). If not properly drafted these by-laws can cause uncertainty.

For strata schemes registered after 1 July 1997, the applicable by-laws are:

  • the by-laws registered with the strata plan (including any amendments or repeals after their registration); and
  • any additional by-laws registered after the strata scheme.

For strata schemes registered before 1 July 1997:

  • the model by-laws 1 – 29 in the Strata Schemes (Freehold Development) Act 1973 (NSW) (the 1973 by-laws) no longer apply;
  • the model by-laws listed in schedule 1 of the Strata Schemes Management Act 1996 (NSW)  now apply (the 1997 by-laws); and
  • any additions to the 1997 by-laws made after 1 July 1997; and
  • any by-laws that were added to the 1973 by-laws; and
  • any amendments, additions to, or repeals of the schemes by-laws made before or after 1 July 1997.

Note that any amendments, repeals or additions to the original by-laws must be registered to be valid but that registration does not make an invalid by-law valid.

Fair Trading has indicated that as part of the strata reform process that existing schemes will be required to consolidate their by-laws. The proposed reforms are expected to be released early in 2015. This provides existing schemes with an ideal opportunity to be proactive and plan ahead by starting the process of reviewing their existing by-laws now. By obtaining advice on their by-laws (including advice on validity) now existing plans will be in a better position to consolidate their by-laws in an organised and considered manner.

 

Kerin Benson Lawyers

Author: Allison Benson

Email: allison@kerinbensonlawyers.com.au

Date: 8 August 2014

Debt Recovery For Overdue Strata Levies: Recovering Legal Expenses

An Owners Corporation is entitled to “recover as a debt a contribution not paid at the end of one month after it becomes due and payable, together with any interest payable and the expenses of the owners corporation incurred in recovering those amounts” under Section 80 of the Strata Schemes Management Act (1996).

The good news is that legal costs are considered expenses for the purposes of section 80 however there are restrictions imposed on the recovery of expenses to be aware of.

What are the limitations?

 In The Owners Strata Plan P 36131 v Dimitriou [2009] NSWCA 27, the Court considered the nature of “expenses” under section 80 of the Act and held that legal costs and expenses incurred in recovery of a debt, including court proceedings, may be claimed by an Owners Corporation under section 80.

However, the Court imposed several limitations on the recovery of legal costs, including those set out below:

  • Legal costs and disbursements must be proven by the claiming party to be reasonably incurred;
  • Legal costs and disbursements must be proven by the claiming party to be reasonable in amount;
  • The Owners Corporation’s conduct in commencing proceedings must be reasonable; and
  • Any claim for expenses, including legal costs, must be made in the same proceedings as the claim for the unpaid levies.

These limitations have been upheld in later cases. In particular, there has been emphasis on legal costs being reasonably incurred and reasonable in amount.

Owners Corporations should take care when making any payment arrangements with lot owners or when commencing proceedings for recovery of overdue levies to ensure their right to claim expenses is not lost, either through unreasonable conduct of the Owners Corporation or by trying to claim expenses after the levies have been fully recovered.

Whilst seemingly straightforward, the recovery of levies can become complicated very quickly.

For advice on levy recovery and further information on what amounts can be claimed from a recalcitrant lot owner, please contact either:

Newcastle Office Sydney Office
Ph: (02) 4032 7990 (02) 8706 7060
Canberra Office Email for all offices
Ph: (02) 6140 3270 enquiries@kerinbensonlawyers.com.au