Smoking and strata schemes: What is the effect of the recent amendments to the Smoke-free Environment Act 2000?

In a win for mixed use strata schemes, the NSW Government’s amendments to the Smoke-free Environment Act 2000 (NSW) mean that smoking is now banned:

  • In all commercial outdoor eating areas; and
  • Within a place that is within 4 metres of a pedestrian access point to a building …[being] a licenced premises or a restaurant.

What this means is that the law banning smoking within 4 metres of a public building has been extended to buildings that contain a restaurant or a venue with a liquor license. It also means that if, like many mixed use strata schemes, your scheme has a commercial lot that uses their outdoor space or the common property for outdoor seating areas for its customers to consume food or drinks that smoking is banned in these areas also.

For some mixed use schemes, smoke drift from visitors to the scheme eating or drinking in outdoor areas or lingering at the entrance to a bar has caused significant discomfort (and potentially nuisance) to lot owners and occupiers living directly above these areas. Now, councils will have the ability to police these areas using on the spot fines. This helps owners corporations in that it takes away the ‘us v them’ attitude that is often found between commercial and residential lot owners and hopefully it will reduce tension between the two.

The owners corporation remains responsible for enforcing its by-laws and the legislative changes should be seen as complementing and supporting an owners corporation’s ability to do so.

If you have any concerns about smoking in your strata scheme please contact Allison Benson of our office. For more information on smoking in strata schemes you may want to read:

Allison Benson

Case Note: Expert Evidence: Can an expert make a compromise?

The Uniform Civil Procedure Rules 2005 (NSW) authorise the referral of certain matters in litigated proceedings to an independent referee. The referee’s determination of the referred matters can then be adopted or rejected by the court. The importance of expert evidence and, in particular, the joint report prepared by the experts for the referee, is paramount. So what happens when your expert’s evidence changes dramatically? The recent case of The Owners – Strata Plan No. 72381 –v- Meriton Apartments Pty Limited [2015] NSWSC 442 examines this situation.

The Facts

The experts of the owners corporation and Meriton both prepared separate reports, which were vastly different in quantum for the amounts estimated to fix the building defects. In a joint report, however, both experts agreed to the quantum. The joint report was adopted by the Referee.

Meriton’s Claim

Meriton sought orders that parts of the Referee’s report (being the parts that relied on the joint report) be rejected and these matters be re-heard, on the basis that Meriton claimed its expert had “misunderstood” his role as an expert. In particular, Meriton submitted that its expert was under a misapprehension that the experts had to reach agreement about the substance of the issues in the joint report, rather than merely having to reach agreement about the manner in which agreed and disagreed issues were set out in the report. As a result, Meriton argued, it would not be in the interests of justice for the Court to adopt the referee’s report.

The Court’s Decision

The Court rejected Meriton’s claim. It found that there was no issue with an expert compromising with another to reach agreement, provided the compromise genuinely reflected the expert’s views. On the evidence before the Court, including multiple signed acknowledgements to be bound by the Expert Code of Conduct, the Court did not find that the expert had misunderstood his role. The Court noted that Meriton should not be allowed to re-agitate the issue with its expert, as this should have been done before the referee, not before the Court. The Court identified the following principles of relevance:

  • Finality of litigation;
  • Issue of estoppel arising from judgments;
  • A party on appeal should be bound by the way it handled its case in the first instance; and
  • The interests of justice.This case emphasises the importance of engaging clearly with your experts and of effective case management. For more information or for assistance please contact our office.
Allison Benson Christopher Kerin
Legal Practitioner Director Legal Practitioner Director
Ph: (02) 4032 Ph: (02) 8706

NCAT Applications: Exclusive use by-laws, the interests of all owners, rights and reasonable expectations

Do you want to renovate your unit but your proposed exclusive use by-law has been refused by the Owners Corporation? Or, do you believe that the terms of a works by-law that has been made are unreasonable? In either case you may be able to make an application to the NSW Civil & Administrative Tribunal (NCAT) for Strata Schemes Adjudicator’s orders under section 158 of the Strata Schemes Management Act 1996 (NSW) (the Act) for the making of the proposed exclusive use by-law or the repeal or amendment of an existing exclusive use by-law.

The key consideration in the first instance is whether the owners corporation has unreasonably refused to make the exclusive use by-law and in the second whether the terms of the by-law providing for maintenance and upkeep of the affected common property are unjust. A related type of application under section 158 can be made if a lot owner has unreasonably refused to consent to the terms of a proposed exclusive by-law or has unreasonably refused to consent to the amendment or repeal of an existing exclusive use by-law.

The purpose of a section 158 application is to ensure so far as possible in a strata scheme that the interests of all lot owners, including the lot owner wishing to do works or having the benefit of an existing exclusive use, and the owners corporation are protected. Why is this important? In a recent matter, one of our clients, a long term owner in the strata scheme wanted to renovate his lot obtain exclusive use of the common property roof space directly above his lot to add an attic room to make room for a growing family. The simple majority of lot owners supported our client. However, a special resolution was required and three investor owners holding a just over 25% of the unit entitlements blocked the motion for an exclusive use by-law that would have authorised our client’s planned renovations. In this case our client had offered to pay a significant sum of money to the Owners Corporation by way of compensation for the use of the unused roof space.

As the motion failed to pass our client would have, without section 158 of the Act, been without recourse and been unable to conduct the works. As it was with our assistance they obtained orders that the proposed by-law be made. NCAT, in considering an application under section 158 must consider the interests of all owners in the use and enjoyment of their lots and the common property and also the rights and reasonable expectations of the lot owner who anticipates a benefit from the proposed by-law (or in the case of an existing by-law derives a benefit from it). In this case it was in the interests of all lot owners and the owners corporation for the by-law to be made.

A section 158 application can be an invaluable second chance to have their proposed by-law made or an existing by-law amended or repealed through an objective third party making a determination. It is a tool for ensuring fairness within divided schemes. Before making an application we strongly recommend that you seek legal advice.

Kerin Benson Lawyers

Author: Allison Benson

Office: Sydney & Newcastle


Date: 14 October 2014

Debt Collectors v Lawyers – When is it time to call in the Legal Professionals?

When seeking to recover unpaid strata levies, it is natural for Owners Corporations to want a fast result with as little money spent as possible. For this reason, many may shy away from enlisting the assistance of lawyers, fearing excessive legal fees will result in more money being spent than saved. But this is not always the case.

Acting as Agent

Debt collectors act as agents for Owners Corporations. This means that Owners Corporations may be held responsible for the actions of their debt collectors. If improper conduct is alleged against the debt collector, the Owners Corporation may quickly find itself embroiled in legal proceedings instigated by the very debtor from whom the Owners Corporation is trying to recover levies.

If Owners Corporations use debt collectors, they should carefully monitor the actions taken by the debt collectors and should familiarise themselves with the Debt Recovery Guidelines. (For more information on the Debt Recovery Guidelines, see our article “Debt Recovery Guidelines: Are You Following Appropriate Procedure?”)

Paying Double?

If debt collectors are unsuccessful in recovering the debt, the Owners Corporation may refer the matter to lawyers for legal action. This means the Owners Corporation may have to pay the debt collector fees for recovery attempts as well as paying legal fees to the lawyers.

Quite often a letter of demand from a law firm carries more weight than a similar letter issued by debt collectors. If lawyers are approached from the outset, Owners Corporations can save money by not paying two different businesses to do the same job. Whereas many debt collection agencies charge commission on successful levy recovery, Kerin Benson Lawyers does not, so Owners Corporations may end up with more money in their pocket.

It’s Complicated

If a debtor disputes a debt, puts forward a settlement offer or wants to negotiate a payment arrangement, there are certain pitfalls that must be avoided to ensure the interests of the Owners Corporation are properly protected. Kerin Benson Lawyers provide Owners Corporations with practical, sound advice on resolving disputes and recovering unpaid levies, ensuring Owners Corporations are legally protected in the event that the debtor defaults or challenges the debt.

For cost-effective, pragmatic advice on debt recovery, please contact:

Allison Benson Angie Rennie
Legal Practitioner Director Lawyer
Ph: (02) 4032 7990 Ph: 02 8706 7060
E: E:


New Debt Collection Guidelines: Are you following the appropriate procedure?

In July 2014, Australian Security Investments Commission (ASIC) and Australian Competition and Consumer Commission (ACCC) jointly released a publication entitled “Debt Collection Guideline: for collectors and creditors” (the Guideline). The Guideline is a timely reminder to Owners Corporations that certain practices must be observed when chasing a recalcitrant debtor for non-payment of levies.

Respect thy debtor

Owners Corporations should ensure any communications with the debtor regarding unpaid levies are made in an appropriate manner and with the debtor only. Owners Corporations should:

  • Ensure contact addresses (e.g. postal address, email address) are current prior to revealing details of the debt by that medium
  • Avoid contacting the debtor at the workplace where possible
  • Not broadcast details of the debt to tenants, co-workers, family or friends of the debtor
  • Respect the debtor and avoid using discriminatory, aggressive or threatening language and/or behaviour towards the debtor

Failure to respect the privacy of the debtor can constitute a breach of the Privacy Act and end up causing more problems for the Owners Corporation. Similarly, aggressive language or unnecessarily frequent contact may be perceived as harassment or coercion.

Documentation is key

Owners Corporations should maintain accurate records in respect of their correspondence and/or attempted communication with the debtor. Records should include:

  • The date, time and location of any discussion, including the names of people present
  • The exact terms of any payment proposal or settlement discussion
  • The date(s) and method(s) by which instalment payments are made to reduce the debt

Honesty is the best policy

Misleading a debtor as to the creditor’s intentions or misrepresenting the potential consequences of non-payment of a debt can constitute misleading conduct and breach Commonwealth consumer protection laws. If a lot owner disputes the debt, Owners Corporations should obtain legal advice.

For assistance with recovering unpaid levies or for more information on debt recovery services, please contact Kerin Benson Lawyers.

Newcastle Sydney
 Ph: (02) 4032 7990  Ph: 02 8706 7060
E: E:
 Ph: (02) 6140 7061


Meeting Notices: Why it is vital to get the timing right

When recovering strata levies or defending an application by a lot owner in respect of the validity of a meeting, it is essential that you have good processes in place and can demonstrate that you have followed these processes when sending meeting notices and levy notices.

In a relatively recent NSW case, the Supreme Court was critical of an Owners Corporation who had commenced levy recovery proceedings against a debtor lot owner. The lot owner was successful on a number of points. Although a NSW case the principles also apply in the ACT.

What happened?

The Owners Corporation sent notices for a general meeting out to lot owners by post on Tuesday 17 January. The general meeting was held on 30 January and at this meeting a special levy was raised. The lot owner fell into arrears. When the Owners Corporation took action to recover the strata levies the lot owner challenged the validity of the 30 January meeting on the basis that inadequate notice of the meeting had been provided.

The Court determined that the Owners Corporation, to prove a meeting notice was sent, must be able to satisfy the Court that:

  1. the meeting notice was correct;
  2. the notice was placed in to an envelope;
  3. the envelope was properly addressed;
  4. the correct postage was paid for the envelope; and
  5. the envelope was physically deposited in a mailbox or post office.

The Court found Clause 32 of Schedule 3 of the Strata Schemes Management Act 1996 (NSW) required at least seven clear days’ notice of a general meeting must be provided. This time frame excludes the postal service rule under the Interpretation Act 1987 (NSW) which deems service to be effected on the fourth working day after the notice was posted. What this means is that the meeting notice was deemed served on Monday 23 January (the fourth working day after the notice was posted). With seven days’ notice required the meeting could not validly have been held until 31 January. Therefore the special levy was invalid.

What do I need to do to ensure the meeting is validly held?

  • Be aware of the postal rule. The date of deemed service is the fourth working day after the notice is posted (s32 Interpretation Act 1987 (NSW) & s160 Evidence Act 2011 (ACT))
  • Make sure that the notice period for the meeting is strictly adhered to. In NSW this is 7 clear days’ notice (Schedule 2, cl 32) and in the ACT this is 14 or 21 days’ notice depending on the motion (Schedule 3, cl 3.6); and
  • Keep a record of the date the notices were sent, who sent them and that your office processes were adhered to.

Kerin Benson Lawyers

Author: Allison Benson


Date: 15 July 2014

What are the potential cost consequences of refusing to participate in Alternative Dispute Resolution processes?

 Many commercial contracts, including those between building managers, facilities managers, caretakers, strata managers and Owners Corporations, have a clause buried towards the end of the contract that sets out a process for resolving disputes.

In my experience it is all too common for parties to ignore the contractual dispute resolution processes set out in their contract and to rush to litigation whether due to heightened emotions, a misunderstanding or lack of knowledge about the process or incomplete legal advice. This can be expensive and lead to unexpected costs consequences. Continue reading

Case Review – Expert Reports and Owners Corporations

A recent Supreme Court decision involving a dispute between an Owners Corporation and a building expert engaged to inspect the property and provide a building defects report has raised the following issues:

  1. the need for an Owners Corporation to consider the scope & brief provided to their building expert;
  2. whether or not the Owners Corporation’s brief is reflected in the expert’s fee proposal;
  3. the use to which an expert report can be put; and
  4. how an Owners Corporation works with its building experts.

Continue reading