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

To clamp, or not to clamp, that is the question: Who does a wheel clamping by-law apply to?

Importantly, by-laws do not bind visitors to the scheme. This means that any by-law regarding visitor parking spaces and parking on common property can only be enforced against a lot owner, occupier, mortgagee or covenant chargee or any lessee or sublessee of any lot or common property.

At most, the NSW model by-laws require a lot owner or occupier to “take all reasonable steps” to ensure that their visitors comply with the terms of the by-laws. Reasonable steps are likely to include lot owners and occupiers informing visitors of the relevant car parking by-laws, requesting that they visitors abide by the by-laws and, if they are advised of a breach, requesting that visitor move their vehicle.

Can we wheel clamp a vehicle on the common property?

This is a very common question, particularly for those who have visitors parking that is visible from the street and their property is near a hospital, shopping centre or commercial strip. The answer is maybe.

Wheel clamping is governed by sections 651B and 651C of the Local Government Act 1993 (NSW). These sections provide that a person (including an owners corporation) cannot immobilise or unlawfully detain a vehicle that they do not own without first obtaining the permission of the person who owns the vehicle. The penalty for doing so can be up to $2,200.

A by-law can provide for wheel clamping however consent to immobilise or detain a vehicle under sections 651B and 651C of the Local Government Act is required. There are very few cases in this area and the jury is still out as to whether section 44 of the Strata Schemes Management Act 1996 (NSW) provides the consent of lot owners and occupiers. It means that the by-laws have the effect of an agreement under seal. It may not however be sufficient to provide the required “consent”. In one QLD case a lot owner argued that they did not give consent (under the QLD equivalent to section 44) and that the consent was forced on them. The QLD Supreme Court agreed and treated the agreements created by way of by-laws between the body corporate and its proprietors as fictional agreements. If this approach was taken in NSW a by-law by itself would not provide the required consent.

To overcome this potential argument we strongly recommend that the consent of all owners and occupiers is obtained to any by-law providing for wheel clamping and our precedent parking by-law provides for this consent together with setting out a detailed procedure which is to be followed prior to any wheel clamping device being used that also includes a warning to the owner of the vehicle.

If your owners corporation is considering amending its by-laws to include the ability to wheel clamp or immobilise a vehicle we recommend they seek detailed advice on such a by-law please contact us at either our Sydney or Newcastle offices.

Allison Benson

Legal Practitioner Director

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 7990allison@kerinbensonlawyers.com.au Ph: (02) 8706 7060christopher@kerinbensonlawyers.com.au

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

Email: allison@kerinbensonlawyers.com.au

Date: 14 October 2014

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

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: enquiries@kerinbensonlawyers.com.au E: enquiries@kerinbensonlawyers.com.au
Canberra  
 Ph: (02) 6140 7061
E: enquiries@kerinbensonlawyers.com.au

 

Using Bankruptcy Proceedings in Levy Recovery: What happens if the debtor pays down the debt?

Once judgment has been granted in a levy recovery matter the Owners Corporation should seriously consider applying for the issue of a bankruptcy notice.

When is a bankruptcy notice possible?

To obtain a bankruptcy notice in levy recovery matters the judgment debt must be over $5,000 and the lot owner(s) must be individuals (not companies).

Why a bankruptcy notice?

A bankruptcy notice is the first step in being able to commence proceedings to bankrupt someone. After it is served, the debtor has 21 days within which to come to a payment arrangement with the Owners Corporation, pay the amount claimed or to apply to have it set aside. If they do not do any of these things they have committed an act of bankruptcy and the Owners Corporation can file a creditor’s petition seeking a sequestration order (this is the technical name for a bankruptcy order).

A bankruptcy notice is an extremely powerful tool in debt recovery especially when the debt relates to strata levies. The reason being is that the debtor lot owner has something valuable that they want to protect; their apartment. If a sequestration order is made and a trustee appointed to the debtor’s bankrupt estate, one of the first things the trustee will do is to consider whether there are any assets such as a unit that can be sold to pay out creditors.

What happens if the debtor pays down the judgment debt after the act of bankruptcy?

This is one of the most common questions we are asked. Quite simply, if a debt of over $5,000 is owed to the Owners Corporation when the act of bankruptcy is committed (i.e. 21 days after the bankruptcy notice is served) then as long as the debt is liquidated (such as a strata levy) it can be the basis of a creditor’s petition and the bankruptcy proceedings can be initiated.

This is helpful as due to the time between filing a claim for the debt and judgment being awarded often other levies have fallen due and payable. Provided these levies were due and payable before the act of bankruptcy they can be added to any amount outstanding under the judgment debt (including the post judgment interest). Often a debtor will pay down the amount owed under the judgment debt to under the $5,000 mark and not realise that other levies that are due and payable can also be claimed as part of the debt in a creditor’s petition.

For assistance with levy recovery action please contact Kerin Benson Lawyers on these details:

Kerin Benson Lawyers

Allison Benson

Email: allison@kerinbensonlawyers.com.au or enquiries@kerinbensonlawyers.com.au

Date: 22 July 2014

 

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

Email: allison@kerinbensonlawyers.com.au

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