Tribunal Decision Regarding The Executive Committee Code Of Conduct In The ACT

Leonard & Anor v Michie & Ors (Unit Titles) [2019] ACAT 14 is a recent decision by ACAT which was determined on 31 January 2019.

It is of interest to strata managers given it is the only decision of any jurisdiction in the ACT which considers allegations of breaches of the executive committee Code of Conduct.

In short, the applicants made over a dozen allegations of breaches of the Code of Conduct by the executive committee members of the Owners – Units Plan No 1636 and Senior Tribunal Member Orr QC considered each allegation in turn and determined whether a breach had occurred or not.

Ultimately, the Senior Member found that there were no breaches of the Code of Conduct by any of the executive committee members but a number of observations were made which are helpful in understanding the Code of Conduct.

Firstly, at paragraphs 29 and 30, in response to the applicants request that executive committee members be removed, or banned from standing for re-election, the Senior Member observes that “the provisions in the Act in relation to the orders the Tribunal can make (section 129) can extend to some claims in relation to the Code. These on their face may allow proceedings for an order requiring an executive member to do something required by the Code, or refrain from doing something in breach of the Code (section 129(1)(a) of the Unit Titles Management Act), particularly in light of the clear statutory obligation to comply with the Code in section 46. It may allow for breaches of the Code to be taken into account in proceedings concerning motions and decisions, especially of the executive committee (section 129(1)(f) and (g)). It may allow for declarations that an executive committee member has breached the Code (section 129(2)). But the respondents argued that the Tribunal could not make orders removing and banning them from holding the position of executive committee member for breach of the Code, or anything else. I think this is correct.”

The Senior Member then approaches each of the various allegations of a breach of the Code of Conduct on the basis that “the tribunal may order an executive member to do something required by the Code, or refrain from doing something in breach of the Code, allow for breaches of the Code to be taken into account in proceedings concerning motions and decisions, and allow for declarations that an executive committee member has breached the Code” (as opposed to such breaches resulting in the removal of an executive committee member or banning them from standing for re-election).

Generally, the Tribunal’s analysis of the various allegations do not involve a lengthy consideration of the Code of Conduct but rather a statement of the facts and a simple statement that the facts do not constitute a breach of the Code of Conduct.

However, at paragraph 184 the Senior Member does observe that “I do not think there is any obligation under the Code of Conduct on executive members to communicate at any other time and in any other manner with another member of the committee. I do not think that generally blocking emails, declining to walk around the complex, being unhelpful, ignoring email requests, turning away, deliberately ignoring well-meant greeting, leaving notes and speaking ill of the applicants in personal conversations to others amount to a breach of the Code of Conduct”.

This decision is helpful to strata managers as it can be provided to disenfranchised lot owners who wish to address the particular conduct of an executive committee member in their owners corporation. Finally, it appears that a breach of the Code of Conduct requires much more than trivial matters to have occurred.

View full decision here.

Security Bars: Common or Lot Property?

In the matter of Cestaro v The Owners – Strata Plan No. 457 NSW Civil and Administrative Tribunal of 12 February 2019 (unreported), it was held that security bars affixed to the external windows of a lot were common property.

The lot owner applicant alleged that security bars that they had installed in 2004 and that were removed by the Owners Corporation in 2015 during remedial works, were lot property and should be replaced by the Owners Corporation.

There was no common property rights by-law permitting the lot owner to install the bars, however, the lot owner had been given permission by their strata manager to change them in 2004. Although the Owners Corporation was subject to model by-law 5 regarding locking or safety devices (which permits lot owners to affix locking or safety devices to common property) this fact was not expressly mentioned in the reasoning of the Tribunal, rather, the reasoning primarily turned on the definition of lot property being the inner surface of the boundary wall and the fact that the security bars had been affixed to common property. The Tribunal further reasoned that the security bars were lot property installed at cost to the lot owner until they were affixed to the common property at which time they became common property.

It was also held that the decision of the Owners Corporation to approve a remedial works contract that expressly included the removal of the existing security bars but not their reinstallation, was a valid decision, and that the Owners Corporation decision to delegate decisions regarding the remedial works to the strata committee was authority for the strata committee’s decision to not allow reinstallation of existing or old security bars, but only to allow lot owners to install new security bars in a style and design of the strata committees choosing.

The reasoning in this decision did not consider whether security bars installed pursuant to a common property by-law would have changed this outcome, however, it is our opinion that it would have dramatically altered the outcome. If a lot owner wants permission to deal with security bars, the security bars should be authorised pursuant to a common property rights by-law that includes terms which provide for the costs and ownership of the bars and any conditions as to style, colour and of course repair, maintenance, and replacement.

Kerin Benson Lawyers advised the Owners Corporation in this matter.

Building and Construction Legislation Amendment Act 2016 – What You Need to Know

On 20 August 2016, the Building and Construction Legislation Amendment Act 2016 (the Legislation) commenced operation. The Legislation is the culmination of several years of consideration by the ACT Government and amends the following laws:

  • Building Act 2004;
  • Building and Construction Industry (Security of Payment) Act 2009;
  • Building (General) Regulation 2008;
  • Construction Occupations (Licensing) Act 2004;
  • Construction Occupations (Licensing) Regulation 2004; and
  • Planning and Development Act 2007.

The Legislation is focused on improving building quality in the ACT as well as the accountability of various construction industry protagonists. Broadly speaking, the Legislation addresses the following issues:

  • under the Building Act 2004 and Building (General) Regulation 2008 – building certification and stage inspections, certificates of occupancy and use, statutory warranties, residential building work contracts, building inspections and inspectors and exempt building work conditions;
  • under the Building and Construction Industry (Security of Payment) Act 2009 – power to make a code of practice for authorised nominating authorities; and
  • under the Construction Occupations (Licensing) Act 2004 and Construction Occupations (Licensing) Regulation 2004 – notifying loss of eligibility and changes of register details, licence applications and renewals, corporate and partnership licenses and nominees, ongoing eligibility, interim and automatic suspensions, powers of ACAT in relation to occupational discipline orders, rectification orders and mandatory qualifications and codes of practice.

The key amendment for apartment owners is the application of statutory warranties to buildings higher than three storeys (previously statutory warranties only applied to buildings of three storeys or less not including basement carparking). Unfortunately, this amendment (together with the appointment of building inspectors) did not commence on 20 August 2016. Rather, the new statutory warranty regime will commence on a day fixed by the Minister but must commence within 12 months of notification (ie no later than 19 August 2017).

Further, statutory warranties are only available to owners corporations and lot owners by virtue of the fact that contracts to carry out residential building work are taken to contain statutory warranties by force of section 88 and that such owners corporations and lot owners are successors in title to the developer. This means that once the new regime in relation to statutory warranties comes into force, it is only contracts to carry out residential building work entered into after this commencement date that will give owners corporations and lot owners the right to sue builders for breach of statutory warranties (once the relevant buildings are completed).

Allison Benson Christopher Kerin
Legal Practitioner Director Legal Practitioner Director
Ph: (02) 4032 7990
allison@kerinbensonlawyers.com.au
Ph: (02) 8706 7060
christopher@kerinbensonlawyers.com.au

NSW FACT SHEET 4: Compulsory Strata Management: How does it affect you and your scheme?

The NSW Civil & Administrative Tribunal (NCAT) has the power under section 162 of the Strata Schemes Management Act 1996 to appoint a compulsory strata managing agent to a strata scheme. This power is also contained in section 237 of the Strata Schemes Management Act 2015 which, but for part 11, will commence on 30 November 2016. The sections, which differ slightly, empower the NCAT the make an order that either all, or part, of the functions* of the owners corporation are delegated to a strata manager.

What does compulsory strata management mean?

The simple answer is that it means different things in different cases. For instance, NCAT may order that all the functions of the owners corporation are to given to the strata management agent or, it may order that only a certain power or function is given to the strata managing agent.

If all the powers of the owners corporation are granted to the strata managing agent meetings of the owners corporation are not necessary. Instead of you, as a lot owner, voting to decide matters the strata manager will exercise their delegated power. If they do so they can raise levies, pass resolutions on behalf of the owners corporation and pass by-laws pursuant to section 65A. A by-law could also be passed pursuant to section 52 by the compulsory strata manager with the prior written consent of the lot owner granted the exclusive use right or special privilege.

On the other hand if the strata manager were only granted the powers of the executive committee, they could call meetings, pay invoices (unless restricted by the owners corporation at general meeting from doing so) and conduct the day to day affairs of the owners corporation but could not pass any resolutions that are required by the Act to be passed at general meeting. This would include resolutions to pass by-laws, to accept an easement or to alter or amend the common property.

Who can apply for an order for compulsory management?

A wide variety of people can obtain an order to appoint a compulsory strata manager and it need not be a lot owner. They are:

  • anyone with an interest or estate in a lot in the scheme or if the scheme is a leasehold scheme, a lease of a lot;
  • anyone who has obtained an order under the 1996 or the 2015 Act that has not been complied with and that imposed a duty on the owners corporation, executive/strata committee or an officer of the owners corporation
  • an authority that has the benefit of a positive covenant requiring a duty of the owners corporation; or
  • a judgment creditor to whom the owners corporation owes a judgement debt

When can the NCAT make an order for compulsory management?

Both the 1996 and 2015 Acts provide that the NCAT may make an order only if satisfied that:

(a)  the management of a strata scheme is not functioning or is not functioning satisfactorily, or

(b)  an owners corporation has failed to comply with a requirement imposed on the owners corporation by an order made under the Act, or

(c)  an owners corporation has failed to perform one or more of its duties, or

(d)  an owners corporation owes a judgment debt.

What does “not functioning or is not functioning satisfactorily” mean?

CTTT (the predecessor to the NCAT) Member Moore in Coote v Sharpe, Wentzel & Owners Corporation Strata Plan 55434 stated that imposing a compulsory strata manager upon an owners corporation is a “draconian” measure as it “removes the democratic process which has been established” under the Act. As such, the reasons for a finding of dysfunction must be based on objective evidence. For this reason, these orders are not lightly granted.

Instances where an order for compulsory strata management has been made show that the following behaviour can be a sign of a failure to function when affects the management structure of the scheme:

–          a failure (or inability) to pass resolutions to raise contributions;

–          a continued failure to carry out required maintenance and repairs

–          a long history of acrimony, deep seated discord and or violence in the scheme;

–          the presence of a voting block, for instance, where divisions within the scheme see a 50/50 stand off meaning resolutions cannot be passed;

–          a pattern of strata managers terminating their appointment; and

–          a pattern of improper decisions making (i.e. decisions not made in accordance with the Act)

* The Dictionary to the Act defines “function” as “function includes a power, authority or duty.”

Any further questions about strata or community titles law?

Call Kerin Benson Lawyers on 02 8706 7060 or email allison@kerinbensonlawyers.com.au or enquiries@kerinbensonlawyers.com.au

NSW FACT SHEET 2: Selling or leasing your lot – Do you need a swimming pool compliance certificate?

This is a reminder that after 29 April 2016 properties in NSW with either a swimming pool or a spa pool may need a valid certificate of compliance or a relevant occupation certificate prior to being sold or leased.

What does this mean?

The Swimming Pools Amendment Act 2012 (NSW) inserted new provisions into the Conveyancing (Sale of Land) Regulation 2010 and the Residential Tenancies Regulation 2010 (clause 40A in the standard form agreement) requiring either a certificate of compliance or occupation certificate (which must be less than three years old and covers the pool) or certificate of non-compliance to be affixed to either the contract for sale or lease agreement.

Both outdoor and indoor pools and spa pools are included but not spa baths. A swimming pool is defined by section 3 of the Swimming Pools Act 1992 (NSW) as:

 “an excavation, structure or vessel:

(a) that is capable of being filled with water to a depth greater than 300 millimetres, and

(b) that is solely or principally used, or that is designed, manufactured or adapted to be solely or principally used, for the purpose of swimming, wading, paddling or any other human aquatic activity,

and includes a spa pool, but does not include a spa bath, anything that is situated within a bathroom or anything declared by the regulations not to be a swimming pool for the purposes of this Act.”

Non-compliance can have significant consequences. For instance, if you are selling your property and required to have a certificate, yet you do not affix it to the contract for sale the purchaser can rescind the contract within 14 days of exchange.

I live in a strata or a community title scheme do these changes apply to me?

The Conveyancing (Sale of Land) Amendment (Swimming Pools) Regulation 2016 (NSW) has now clarified the situation. These Regulations come into effect on 29 April 2016 and have the effect that if the contract for sale of land relates to a strata scheme or a community scheme that comprises of more than two lots, or the contract is an off-the-plan contract, a certificate of compliance, occupation certificate (which must be less than three years old and covers the pool) or certificate of non-compliance is not required to be included in the contract for sale.

For investor lot owners, the Residential Tenancies Amendment (Swimming Pools) Regulation 2016(NSW) has a similar effect and swimming pool certificates are not required to be provided along with any residential lease.

What does this mean? It means most strata or community title lot owners will not need to obtain the compliance certificate, occupation certificate or certificate of non-compliance and provide it with their contract for sale or with a residential tenancy agreement when leasing their properties. The requirement to do so only effects schemes that have two or less lots.

I’d like to know if the pool is compliance anyway, how can I check if a swimming pool already has a certificate of compliance?

Information on registered pools and whether a certificate of compliance has been issued is provided on the NSW Swimming Pool Register which can be searched at www.swimmingpoolregister.nsw.gov.au.

Where there is a pool on common property, such as strata or community title property, does every unit owner need to have the pool inspected separately?

Your owners corporation, community, neighbourhood or precinct association should arrange for the swimming pool to be inspected and obtain the certificate of compliance. Individual lot owners may access the certificate of compliance through the Swimming Pool Register.

Any Further Questions about strata or community titles law?

Call Kerin Benson Lawyers on 02 8706 7060 or email allison@kerinbensonlawyers.com.au or enquiries@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

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: https://allisonbensonau.com/2014/08/15/no-smoking-please-preventing-smoking-in-your-strata-scheme/

Allison Benson

allison@kerinbensonlawyers.com.au

Renovations in Strata & Community Title Lots: New Planning “One-Stop-Shop” Website to Fast Track Development Approvals

This is a caution that the new website https://hub.planning.nsw.gov.au/ for home owners wanting to renovate their properties launched by the Dept. Planning & Environment to fast track development approvals is not a one-stop-shop. Home owners in strata & community schemes should remember that they may need the approval of their owners corporation, building management committee or relevant association.

Why is this important to remember?

Strata Schemes

For owners of a strata property, if the work you intend to do affects the common property then, in addition to considering whether you need development approval for the work, you must have the approval of your owners corporation to conduct the work. As the owners corporation owns the common property you cannot alter the common property without its permission.

If your planned work is major renovation work, then any approval will by way of a motion passed at a general meeting for a by-law under either section 65A or 52 of the Strata Schemes Management Act 1996 (NSW) authorising the works. If a development consent is required then the owners corporation as the owner of the common property affected by the renovations will also have to consent to the development application.

If development consent is not required as your planned work is minor, such as installing new cupboards or new shelving along a common property wall, then model by-law 5 applies. This means you must request written approval from your executive committee prior to doing this work. If your scheme is not governed by the model by-laws check for an equivalent by-law.

You should also consider if there are any by-laws setting standards. Model by-law 17 provides that you must not maintain anything in a lot that is not in keeping with the appearance of the building. Installing a trellis may breach this by-law. If your strata scheme is only part of a building, you must also comply with any architectural guidelines in the strata management statement.

Community Associations

If you live in a community association you should keep in mind the architectural guidelines for your association. These guidelines will often provide for the approved shades of paint or material that must be used. For instance, installing an ochre coloured roof or a tin roof instead of a charcoal slate roof may breach your association’s architectural guidelines. You should also consider whether the work you are doing will affect any community property such as piping or cabling for services or even footpaths. These sort of mistakes are costly to remedy, can cause bad feelings in the community and are easy enough to avoid with a bit of prior research.

For further information, or for a quote on preparing any necessary by-law, please contact Kerin Benson Lawyers on 02 8706 7060.

Kerin Benson Lawyers

Author: Allison Benson

Office: Sydney & Newcastle

Email: allison@kerinbensonlawyers.com.au

Date: 13 March 2015