The Scenario

Mr Smith owns a residential lot in a strata building in Sydney.  The floor tiles in Mr Smith’s bathroom have cracked and are damaged beyond repair.  The building was constructed 30 years ago so matching replacement tiles cannot be found.  Is Mr Smith entitled to insist on the owners corporation re-tiling his whole bathroom so that the bathroom tiles have a uniform finish?  In this article we explore the answer to that question.

The Law

An owners corporation has a statutory duty to properly maintain and keep in good repair the common property and, where necessary to renew or replace any fixtures or fittings that form part of the common property under section 106 of the Strata Schemes Management Act 2015.

This duty requires the owners corporation to replace an item of common property when it is reasonably necessary to do so because, for example, the item has been damaged beyond repair: Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC425.

So what happens when tiles on the floor or a wall of a bathroom that form part of the common property are damaged beyond repair but matching tiles cannot be found.  Can the owners corporation just replace the damaged tiles doing the best it can?  Or does the owners corporation have to re-tile the entire bathroom to ensure a uniform tiled finish?

Replacing Damaged Tiles

Where tiles are damaged beyond repair and matching tiles cannot be sourced, the duty of the owners corporation is to use replacement tiles that are substantially similar in appearance, characteristics, quality and amenity to the existing tiles.  This can require the owners corporation to replace a larger section of tiles to achieve substantial similarity: Selkirk v The Owners – Strata Plan No. 2661 [2024] NSWCATAP 17.

However, this does not necessarily mean that, where matching tiles cannot be found, the owners corporation is responsible for re-tiling the entire bathroom.  There are a number of cases which make this clear.

The Cases

1. In Stolfa v Owners Strata Plan 4366 & ors [2010] NSWSC 1507 a lot owner did work which damaged five tiles on a bathroom wall in another lot. The owner of the damaged bathroom applied for an order that the other owner compensate her for the cost to re-tile the whole bathroom because matching tiles could not be found. The Court rejected that claim and was unpersuaded that such a course was reasonable, particularly in the absence of evidence establishing that a reasonably approximate matching tile, albeit not a precise match, was unachievable. The Court allowed an amount to cover the cost of re-tiling the damaged wall only.
2. In Petropoulos v CPD Holdings Pty Ltd t/as The Bathroom Exchange (No 2) [2018] NSWCATAP 233 a builder renovated a bathroom and an ensuite bathroom for a homeowner but built the shower recesses too small. The owner wanted the builder to re-tile the whole bathroom floor after enlarging the shower recesses because matching tiles could no longer be found and the owner was concerned that a patch repair would compromise the waterproofing membrane. NCAT’s Appeal Panel rejected the owner’s request and concluded that it was reasonable for the builder to attempt to match the tiles rather than completely re-tiling each bathroom. The builder was ordered to ensure that replacement tiles were of the same colour, dimensions and type as the original tiles, or if no identical replacement tiles were available, of a colour that most closely matched the original tiles.
3. In The Owners – Strata Plan No 74602 v Brookfield Australia Investments Ltd [2015] NSWSC 1916 an owners corporation sued a builder for defects. The owners corporation alleged that there were waterproofing defects in bathrooms due to incorrectly installed water stop angles as a result of which bathrooms needed to be completely re-tiled due to the difficulties in obtaining matching tiles, even though only a small number of tiles needed to be replaced. The Court concluded that this would amount to the complete demolition and reconstruction of the bathrooms which was unreasonable and unnecessary particularly as there was no evidence of water leakage from the bathrooms.
4. In SP 62930 v Kell & Rigby Holdings Pty Ltd [2010] NSWSC 612 an owners corporation sued a builder for various defects including waterproofing defects in bathrooms. The owners corporation asked the Court to order the builder to pay damages to cover the cost of re-tiling all of the bathrooms because matching tiles could not be found and owners were entitled to a uniform tiled finish in their bathrooms. The Court concluded that it would be unreasonable for an owner to insist on replacement of a large quantity of undamaged tiles at great cost if a close match could be found and installed in a place (such as an architectural break) where the joinder of the tiles would not be immediately obvious. The Court held that the floor tiles within the showers in the affected lots should be replaced, making use of an appropriate existing architectural break, and that it was not reasonable for the owners corporation to insist upon the complete re-tiling of the entirety of the bathrooms.

Analysis

These cases demonstrate that both NCAT and the Supreme Court have rejected claims for entire bathrooms to be re-tiled when a small section of tiles are damaged or defective and perfectly matching tiles cannot be found.

However, in general, the owners corporation will still need to ensure that the work it does to replace the damaged tiles achieves an acceptable aesthetic finish.  This may require the owners corporation to re-do more than just replace the damaged tiles.  It can require the owners corporation to replace, for example, one or more walls which contain damaged tiles or an entire shower recess by making use of appropriate architectural breaks.

Ultimately, each case turns on its own facts but it will often be the case that it will be unreasonable for an owner to insist on an owners corporation replacing a large quantity of undamaged tiles at great cost if a close match can be found to achieve an acceptable aesthetic finish.

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Is there a need to update your short-term letting by-law?

Major players, Airbnb and Stayz, in the short term rental accommodation (STRA) market have both committed to support the NSW government’s tourism levy by way of a formal submission.

However, both players are calling for all tourism accommodation operators including hotels to also foot the new tax.

The NSW government’s review of STRA is in response to growing calls for stricter regulations on the burgeoning short-term rental market, which has faced criticism for its impact on housing affordability and local communities.

The levy is structured to ensure that larger operators, who derive substantial income from short-term rentals, contribute their fair share to the local economy. At the same time, it aims to minimize the impact on small-scale operators and homeowners who rent out their properties occasionally.

For more information: Airbnb and Stayz Accept Tourism Levy for Holiday Stays

DO YOU NEED TO UPDATE YOUR SHORT TERM RENTAL BY-LAW?

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Are Visitor Parking Spaces Exempt from Levies?

A recent decision of the Appeal Panel of NCAT has re-examined the question of as to whether visitor parking spaces in a residential strata complex qualify for exemption from levies which may be payable pursuant to the Parking Space Levy Act 2009 (NSW).

NSW Government Introduces the Parking Space Levy Act

An attempt to discourage or reduce traffic congestion in certain key Sydney business districts, in 2009  the NSW Government introduced the Parking Space Levy Act , the effect of which was to make a levy payable by landowners  on certain off-street parking spaces located in specified districts.

In broad terms, the districts to which the legislation currently applies are:

• Sydney CBD;
• North Sydney/Milsons Point;
• Bondi Junction;
• Chatswood;
• Parramatta; and
• St Leonards.

There are designated maps which set out in detail the parts of those areas to which the levy applies, and the levy has two categories. Category 1 (Sydney CBD and North Sydney/Milsons Point) has the highest levy rate, and  the balance of districts are designated as Category 2, for which a lower rate is payable.

The relevant legislation also contains exemptions, one of which is set out in Regulations 7 & 8 of the Parking Space Levy Regulation 2009 (the Regulation). One of the exempt purposes is where the parking spaces are for “the parking of motor vehicles by persons who reside on the premises or an adjoining premises”.

NCAT Disputes Visitor Car Space Assessment

The premises in question in this case were located in Milsons Point, and were therefore designated as “Category 1”. The Chief Commissioner of State Revenue made a determination that the strata scheme in Milsons Point was liable to pay a car space levy on 5 of 7 car spaces which were set aside for visitors to the property. The strata scheme itself is a mixed commercial and residential building containing 33 residential apartments and 7 commercial suites.

An application was made by the strata scheme to the NSW Civil and Administrative Tribunal (NCAT) disputing the assessment made by the Chief Commissioner of State Revenue on the basis that the visitor car spaces in question should have been considered as “exempt” parking spaces.

Specifically, the strata scheme’s original application to NCAT argued that the exemptions described in Regulations 7 and 8 of the Regulations for “the parking of motor vehicles by persons who reside on the premises or an adjoining premises” should include parking spaces set aside for visitors of persons who reside on the premises.

The original decision of NCAT was that visitor car spaces were not exempt. The owners corporation then appealed the original NCAT decision in relation to this issue to the Appeal Panel.

The Decision of the Appeal Panel

The Appeal Panel rejected the proposition that parking for guests of residents was intended to be covered by the relevant exemption.

The Appeal Panel noted that Regulations 7 and 8 contained a number of specific exemptions including for parking of contractors and consultants providing services on the premises. The Appeal Panel argued that  if the Parliament had intended for an exemption to be granted for the parking of “guests”, then it could have included that exemption explicitly within those Regulations, which it did not.

The Appeal Panel noted that limiting the exemption in this way was also consistent with the aims of the legislation, being to discourage car use in the area. The Appeal Panel found that the parking spaces in question were for a combination of exempt and non-exempt purposes, and therefore not “exclusively” set aside for an exempt purpose.

The Appeal Panel therefore upheld the original decision of NCAT, and the original decision of the Chief Commissioner of State Revenue to apply the levy to these car spaces was affirmed.

The Conclusion

Although the Act and the Regulations apply only to a limited set of areas within Sydney, it is within the power of the Government to expand the list of areas to which that levy will apply in the future.  In light of current public policy settings regarding driving and motor vehicle use generally, the exercise of that power to expand the list of leviable areas in Sydney must be considered a possibility.

Owners Corporations within Category 1 and Category 2 areas should be aware of their obligations under the Act and the Regulations,  and the applicability of those legislative instruments to their particular circumstances.

Need Help with a Parking Issue?

We are happy to provide guidance to strata schemes who seek interpretation of the application of any Ruling in relation to levies of this kind or simply require general parking advice in relation to the issue.

Warwick van Ede I BEc LLM I Lawyer

Since 1990, Warwick has specialised in strata law, property law and litigation. Recognised for his expertise, he is also a NSW Law Society Accredited Specialist in Property Law. In 2021 he was selected to serve on the Property Law Committee of the Law Society of NSW. Profile I LinkedIn

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Lot Owners who Breach By-laws

An owners corporation is able to take legal action in NCAT against an owner who breaches its by-laws.

There are typically two types of legal action the owners corporation can take against the owner.

First, the owners corporation can apply to NCAT for an order to require the owner to comply with the by-laws or to stop breaching them.  Second, the owners corporation can ask NCAT to impose a monetary penalty on the owner if the owner has breached a by-law after being given a notice to comply with the by-law.

However, what happens when an owners corporation seeks both an order to stop an owner breaching a by-law and a penalty in the same legal action?  Can NCAT do both at the same time?

A recent decision by NCAT’s Appeal Panel sheds light on that issue.

Introduction to By-law Breach Case

Tania Brown lives in a unit in a strata building in NSW.  Ms Brown keeps dogs in her unit.

The building is governed by a by-law which requires owners and occupiers of lots to obtain owners corporation approval to keep dogs in their units.  The owners corporation alleged that Ms Brown had not obtained any approval to keep her dogs and that her dogs barked and caused a nuisance to other residents.

On 3 December 2021, the owners corporation issued Ms Brown with two notices to comply with by-laws.

The first notice alleged that Ms Brown had breached the noise by-law by allowing her dogs to constantly bark which disturbed the peaceful enjoyment of other residents.

The second notice alleged that Ms Brown had breached the keeping of animals by-law by having 4 large dogs within her unit without the approval of the owners corporation.

Prior to those notices being issued, Ms Brown had agreed to remove the dogs by 1 December 2021 in a settlement agreement made at a mediation conducted by NSW Fair Trading.

By-law Breach Legal Action

The owners corporation alleged that Ms Brown did not remove the dogs contrary to the settlement agreement and had continued to breach the by-laws after it issued the two notices to comply against her.

Consequently, the owners corporation commenced legal action in NCAT against Ms Brown.  In that legal action the owners corporation sought an order for Ms Brown to remove her dogs and a further order that Ms Brown be penalised $1,100.00 for contravening the by-laws after the notices to comply were issued against her.

In July 2022, the NCAT case was listed for a hearing at which the owners corporation was successful and orders were made, by the consent of Ms Brown and the owners corporation, to require Ms Brown to pay an $1,100.00 penalty to the owners corporation and remove all but one dog from her unit.  The order imposing the penalty would not apply if Ms Brown removed the dogs by 19 July 2022.

The Appeal Against NCAT

Shortly afterwards, Ms Brown filed an appeal against the orders made by NCAT, even though she agreed to those orders being made.  Despite that, Ms Brown’s appeal was successful.

The orders made by NCAT were set aside and the case was sent back to NCAT for a further hearing.

A Mixed Bag?

During the course of the appeal, NCAT’s Appeal Panel considered whether it was possible for an owners corporation to seek in the same proceedings in NCAT both an order to require an owner to comply with a by-law (in this case by removing dogs from a unit) and a further order for a monetary penalty to be imposed on the owner.

The Appeal Panel concluded that this was not possible essentially for three reasons.

First, different procedural rules apply to a mixed application seeking general orders and the imposition of a penalty because, for example, the rules of evidence do not apply to an application for general orders but, in contrast, the rules of evidence do apply to proceedings for the imposition of a penalty.

The Appeal Panel considered those different rules indicated that the Legislature intended that separate proceedings would need to be brought by an owners corporation to seek general orders and the imposition of a penalty.

Second, the Appeal Panel held that procedural fairness could not be afforded to the parties in mixed proceedings where different rules of evidence applied and a party could claim civil penalty privilege when giving evidence in proceedings for the imposition of a penalty but doing so would disadvantage that party in proceedings seeking general orders for compliance with the by-law.

Third, the Appeal Panel noted that different appeal rights exist in relation to an application for general orders and an application for the imposition of a penalty.  General orders can be challenged by way of an internal appeal to NCAT’s Appeal Panel whereas an appeal against a penalty needs to be filed in a Court.

The Appeal Panel concluded that the Legislature did not intend that an owner would be required to lodge two appeals to different bodies to challenge general orders and penalties made against him or her in the same proceedings in NCAT.

It was for these reasons that the Appeal Panel ordered the owners corporation to start again in NCAT and to only seek a general order to require Ms Brown to remove all but one of her dogs, not a penalty.

Conclusion

The decision of the Appeal Panel means that an owners corporation can no longer file one application in NCAT seeking both orders to require an owner or occupier of a lot to comply with a by-law and for a penalty to be imposed on the owner or occupier.

Instead, the owners corporation will either need to decide whether it wants to seek general orders or a penalty and commence one set of proceedings to seek either remedy or alternatively file two separate applications in NCAT, one seeking general orders for compliance with the by-law and the other seeking the imposition of a penalty.

No doubt commencing two separate proceedings would add to the time, cost and complexity of the case and quite possibly render it commercial unviable for an owners corporation to seek both general orders and a penalty against an owner or occupier who breaches its by-laws.

Case Name: Brown v The Owners – Strata Plan No. 82527 [2022] NSWCATAP 328

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Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Restricting or Banning Smoking in Strata

Smoking in strata buildings is a hot topic as Queensland grapples with a proposal to change their strata laws to allow smoking to be prohibited in strata buildings.  There are many buildings that have introduced by-laws banning smoking.  But most strata buildings still do not have a by-law concerning smoking.  So, is it possible to stop people smoking in a strata building without a by-law that bans smoking?  And if it is possible to stop smoking without a by-law, is it still necessary or desirable to have a by-law that bans or restricts smoking and, if so, why?

Banning Smoking without a By-Law

Somewhat surprisingly, it is possible to stop residents of a strata building smoking in their lots or on common property without a specific by-law that prohibits smoking.  Section 153 of the Strata Schemes Management Act 2015 prohibits residents from using or enjoying their lots in a manner or for a purpose that causes a nuisance or hazard to another resident. There are now three cases in which NCAT has made orders prohibiting residents in strata buildings from smoking on the basis that smoke caused by smoking constituted a nuisance to other residents in contravention of section 153.

NCAT Cases

In May 2019, a lot owner, Martin Gisks, succeeded in obtaining an order from NCAT prohibiting the resident of another lot in his building smoking on her balcony or in her bedrooms and requiring that resident to close all exterior doors and bedroom and bathroom windows when smoking inside her lot (Gisks v The Owners – Strata Plan No. 6743 [2019] NSWCATCD 44).

In October 2022, lot owners in a different building, Mr Pittman and Ms Cartwright, obtained orders from NCAT prohibiting the owners of another lot smoking or permitting any other person to smoke tobacco products on the balcony of their lot, and prohibiting them from permitting smoke from any tobacco product to be emitted from the interior of their lot into the lot of Mr Pittman and Ms Cartwright (Pittman v Newport [2022] NSWCATCD 173).

More recently, in June 2023, an owner in a strata building, Haydn Shaw, obtained an NCAT order prohibiting the owner and resident of another lot permitting the smoking of tobacco products in the courtyard of their lot (Shaw v Euen [2023] NSWCATCD 68).

In each case, NCAT concluded that the smoke caused by the smoking of cigarettes or tobacco products by residents constituted a nuisance which interfered with the amenity of other residents in contravention of section 153 of the Act.  It was on that basis that NCAT made orders prohibiting or restricting smoking in each of these cases.

Is a By-Law Banning Smoking Desirable?

These NCAT cases beg the obvious question:  does an owners corporation need to bother introducing a by-law prohibiting or restricting smoking?  The answer is “Yes” if the owners corporation wants to make it easier to ban or restrict smoking in its building.

This is because without a by-law that bans or restricts smoking:

• the owners corporation may not have standing to apply to NCAT for orders to prohibit residents smoking in a way that causes a nuisance to other residents because the owners corporation itself has not suffered from that nuisance (The Owners – Strata Plan No. 2245 v Veney [2020] NSWSC 134); and
• there is a need to prove that not only particular residents are smoking but also that the smoke from cigarettes or tobacco products has caused a nuisance to other residents by unreasonably and substantially interfering with the use and enjoyment of their lots (something which may be difficult to do).

In other words, if a by-law exists that bans smoking the owners corporation is able to enforce that by-law and to succeed it does not need to show that smoke from cigarettes constitutes a nuisance to other residents.  The owners corporation just needs to prove that particular residents are smoking in breach of the by-law.  That is much easier to do.

Conclusion

It is possible to stop residents smoking without a by-law that bans smoking.  However, it is much more difficult to do so because it requires proof that the smoking causes a nuisance to other residents.  And there is real doubt that an owners corporation can apply to NCAT for an order to stop residents smoking in those circumstances.  Introducing a by-law prohibiting or restricting smoking overcomes those problems, gives the owners corporation the right to take steps through NCAT to prevent residents smoking and makes it easier for the owners corporation to win the case and put an end to smoking in its building.

DO YOU NEED A BY-LAW THAT PROHIBITS OR RESTRICTS SMOKING? CLICK HERE NOW!

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

An owner is entitled to appoint a “person” to act as his or her proxy at a general meeting of an owners corporation.

But does that allow an owner to appoint a company as his or her proxy rather than an individual?  The answer might surprise you.

 Is it Possible for an Owner to Appoint a Company as their Proxy?

Owners in strata buildings regularly appoint other people to act as their proxies at general meetings of owners corporations.  Invariably, those proxies are individuals, often other lot owners.  But is it possible for an owner to appoint a company as his or her proxy to vote at a general meeting of an owners corporation?  If so, who is entitled to exercise voting rights on behalf of the company as proxy?  The answer lies in the Strata Schemes Management Act 2015 (Act) and other legislation.

An Analysis

An owner is entitled to appoint a “person” to act as his or her proxy at a general meeting: cl 23(3) and 26(1), Sch 1 of the Act.  However, the Act does not provide a definition of a “person”.  But it is clear that a person can be an individual or a company for several reasons.

First, the Interpretation Act 1987 says that in any Act “person” includes an individual or a company: section 3(3) and Sch 4.

Second, the expression “person” is used throughout the Act in a way that makes clear that it can include both an individual or a company.  For example:

• section 7 expressly provides that a person can be a company for the purpose of determining whether a person is connected with another person;
• section 10(2) prohibits an owners corporation delegating any of its functions to a person unless the delegation is specifically authorised by the Act and it is clear that a “person” in that context would include a strata managing agent which would typically be a company;
• section 12 allows the owners corporation to employ any person that it thinks fit to assist it exercise its functions which includes a building manager which typically carries on business through a company;
• section 22 requires a “person” who has an interest in a lot that gives the person a right to cast a vote either personally or by nominee at meetings of the owners corporation to give the owners corporation written notice of that interest – in that context, a “person” clearly includes a company which owns a lot which is able to cast a vote via a company nominee.

There are other indications from the language used in the Act that a person is not limited to an individual but can include a company.  For example:

• The Act gives a co owner of a lot (which could be company) the right to vote at a general meeting in certain circumstances: cl 23(4) and (5) Sch 1;
• An original owner (i.e. the developer) can cast a vote by means of a proxy in certain circumstances (and a developer is almost invariably a company): cl 25(5) and (6), Sch 1; and
• A building manager or strata manager can vote as a proxy provided that their vote does not result in them obtaining a material benefit (and a building manager and strata manager are typically a company): cl 25(7), Sch 1.

Moreover, the expression “person” where used in legislation has repeatedly been interpreted by the Courts to mean both an individual and a company: see In the matter of Metal Storm Limited (in liquidation) (Receivers and Managers Appointed) (No. 2) [2019] NSWSC 1682.

There are other reasons why an owner can appoint a company as his or her proxy.  For example, a company can be appointed as an attorney under a power of attorney and the appointment of an attorney is similar to the appointment of a proxy given that in both cases a person is appointing another person or company to act as his or her agent.

And in sphere of company law, a shareholder can appoint a “person” as his or her proxy to vote at meetings of a company and it is clear that the person who is appointed as the proxy can be either an individual or a company: see section 249X of the Corporations Act 2001.

Finally, there is nothing in the Act which explicitly prohibits an owner appointing a company as his or her proxy.

Who Exercises Proxy Voting Rights?

Where an owner appoints a company as his or her proxy, the company itself cannot exercise voting rights as the proxy.  So who does?

Obviously, a company that is appointed as a proxy needs to appoint an individual to exercise the powers of the company as a proxy.  That would typically be done by a written notice given by the company to the owners corporation specifically empowering the individual to act on behalf of the company as proxy at meetings of the owners corporation.  Normally, that individual would be the company secretary or a director of the company.  But as long as the person is properly authorised by the company to exercise proxy voting rights on its behalf, and the owners corporation has notice of that authority, he or she may do so.

Conclusion

Whilst it is uncommon for an owner to appoint a company as his or her proxy, that situation can arise.  When it does, an individual with the authority of the company that the owners corporation has notice of is able to exercise the company’s proxy voting rights on behalf of the owner.

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

There are more than 85,000 strata schemes in NSW with approximately one in seven NSW residents living in strata apartments and it’s estimated by 2040 this will grow by 50 percent in Greater Sydney!

So, it’s no suprise that the number of people living in strata applying to NCAT for orders to resolve strata disputes has significantly increased by 45% over the last 5 years.

Cases related to water leaks, delays in fixing leaks and claims for compensation for rental loss have played a major role in the growth of NCAT cases.

In this article we take a closer look at the responsibility of an owners corporation to repair common property water leak damage.

The Duty to Repair

Section 106 of the Strata Schemes Management Act 2015 (Act) imposes on an owners corporation a duty to:

(a) properly maintain and keep in a state of good and serviceable repair the common property;

(b) where necessary, renew or replace any fixtures or fittings comprised in the common property.

This duty requires an owners corporation to fix any defects in the common property that are allowing water to leak into a lot.

The Nature of the Duty to Repair

The duty of the owners corporation to maintain and repair common property has been considered in a number of cases.

In those cases, the Supreme Court and NCAT has said that the duty to repair common property:

(a) is compulsory;

(b) is absolute; and

(c) is not a duty to use reasonable care to maintain and repair common property or to take reasonable steps to do so but a strict duty to maintain and keep in repair.

This means that an owners corporation cannot delay any repairs that need to be carried out to fix defects in the common property that are causing water to leak into a lot.  Even if it is impossible to find contractors who are available to repair those defects, that does not provide an owners corporation with a lawful excuse for delaying any necessary repairs to common property.

Other Aspects of The Duty to Repair

There are other aspects of the duty to repair common property that are often overlooked particularly in the case of new buildings or where a tenant damages common property.

The Supreme Court and NCAT have held that the duty to repair common property:

(a) extends to require the remediation of defects in the original construction of the building;

(b) must still be fulfilled even if the owners corporation did not cause the damage to the common property which needs to be repaired.

This means that, in general, an owners corporation cannot blame an original builder or developer for defects in the common property and refuse to fix them.  However, if the owners corporation takes legal action against a builder or developer in respect of defects in the original construction of the common property, then the owners corporation can put on hold its obligation to repair common property defects.

Further, the cases say that even if a person damages the common property, in general, the owners corporation must still repair that damage, even though it may have a right to recover the cost of that repair from the offender.  Alternatively, under section 132 of the Act, the owners corporation can apply to NCAT for an order to require an owner or occupier to repair damage to the common property caused by them.  It appears that if the owners corporation takes legal action against an owner or occupier in NCAT to obtain that order, that allows the owners corporation to put on hold its duty to repair the damage.

Anything Else?

The duty to repair the common property also requires the owners corporation to carry out repairs which are not for the benefit of the majority of owners.  Indeed, the owners corporation is obliged to carry out repairs to the common property that only benefit a single owner.  This means that an owners corporation cannot refuse to repair a leaking window on common property on the basis that the leak only affects one lot.

Is there an Escape Route?

There are generally two ways for an owners corporation to relieve itself from its duty to repair common property (apart from the ways we have discussed above).

First, an owners corporation can pass a special resolution at a general meeting to determine that it is inappropriate to repair a particular item of common property.  This can be done under section 106(3) of the Act but only if the decision will not affect the safety of the building or detract from the building’s appearance.

Second, an owners corporation can make a common property rights by-law that transfers its responsibility for the repair of a particular item of common property to one or more owners.  The by-law needs to be approved by a special resolution at a general meeting.  However, the by-law also needs to be approved by the owners who will be responsible for repairing the item of common property under the by-law.  Often it proves difficult to obtain the consent of those owners.

What about Compensation?

Inclement weather can cause a substantial increase in claims for compensation being made by owners against owners corporations who have failed to repair defects that have allowed water to leak into and cause damage to lot property.  Typically, those claims are made by investor owners for rental loss when the damage to their lots become so severe that the lots are uninhabitable.  But compensation claims can also cover alternate accommodation expenses if an owner occupier is forced to move out of a lot due to damage caused by water ingress, the costs an owner incurs cleaning and repairing lot property (e.g. replacing saturated carpet), experts’ fees and legal costs.  The liability of an owners corporation to pay compensation to an owner is a strict one.

This can make it difficult for owners corporations to defend compensation claims that are made by owners as a result of common property defects that allow water to leak into and damage lot property. Indeed, one Court has remarked that this puts an owners corporation into the position of an insurer.

Conclusion

Even though it may be difficult to find contractors who are able to repair common property defects, that does not provide an owners corporation with a lawful excuse for delaying essential repairs and maintenance.  The duty to repair is a strict one and there are limited exceptions to that rule.  This emphasizes the importance of proactive and ongoing building maintenance to help avoid the problems that many owners corporations are now encountering.

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Fire Orders and Cost Recovery By-laws

An owners corporation is only responsible for the common property in its strata scheme.  So how does an owners corporation deal with a fire order that requires it to do work to lot property?  Can a Council issue a fire order against an owners corporation to do work to lot property? If so, can the owners corporation make a by-law to recover from owners the costs it incurs doing fire safety work in their lots? The answers might surprise you.

Strata Law

An owners corporation is the owner of the common property it is strata scheme.  The owners corporation is responsible for managing and controlling the use of the common property and maintaining and repairing the common property.  Those obligations arise under the Strata Schemes Management Act 2015 (Strata Act).

An owners corporation does not own the lots in its strata scheme, and under that Act, the owners corporation has virtually no responsibility in relation to any of the lots.  This is because the lots are privately owned and the owners and occupiers of the lots are generally responsible for managing and maintaining them.  So, under the Strata Act, the owners corporation is generally not responsible for maintaining and repairing lot property.  Further, in general, the owners corporation is only able to adopt budgets and raise levies to cover expenses associated with the common property, not lot property

Fire Orders

But what happens when a Local Council issues a fire order that requires an owners corporation to carry out work to both common property and lot property.  Does the Council have power to issue that order? And does the owners corporation have power to comply with the order and do work that affects lot property?

Planning Laws

The Environmental Planning and Assessment Act 1979 (EPA Act) gives a Local Council power to order the owner of premises to do things that are specified in the order in order the promote adequate fire safety in a building when provisions for fire safety in the building are inadequate to prevent, suppress or prevent the spread of fire.  The EPA Act says that premises include a building and that an owner includes, in the case of land that is the subject of a strata scheme, an owners corporation.  Therefore, the EPA Act gives a Local Council power to order an owners corporation to carry out work to improve fire safety to both common property and lot property.

Case Law

This was confirmed by the NSW Court of Appeal as long ago as 1985.  In 1985, the Court decided the case of Proprietors of Strata Plan 159 v Parramatta City Council.  In that case, the Council had issued a fire safety order to the owners corporation of a strata building which required the owners corporation to carry out fire safety upgrades principally in two lots which were to be used as a restaurant.  The owners corporation challenged the order and argued that the order unfairly burdened other owners with the costs of carrying out fire safety upgrades predominately to those two lots.  However, the Court concluded that the statutory language was clear in permitting a Council to issue a fire order against an owners corporation that required work to be done to lot property.  The Court acknowledged that this meant that sometimes the costs of complying with a fire order would be shared by all of the owners even when the need for fire safety upgrades was confined exclusively to the lots of some of the owners which may seem inequitable.

But the Court considered that there were two answers to this problem.  First, if the legislation clearly allowed a fire order to require an owners corporation to do work to lot property the mere fact that might produce a sense of injustice between owners was not a reason for the Court frustrating the clearly expressed intention of the legislature and it was a matter for the Parliament to change the legislation to overcome any unfairness if it saw fit to do so.  Second, fire is a phenomenon which endangers all owners and occupiers of lots meaning all owners have a common interest in fire prevention and fire safety.  This meant that it made sense for the legislation to allow the Council to issue one fire order against the owners corporation rather than have to issue and monitor compliance with multiple fire orders against numerous parties.  Ultimately, the Court considered that it was in the common interest of all owners for the Council to have the power to issue the fire order against the owners corporation.  The Court’s decision has recently been referred to with approval by NCAT.

Recovery of Costs

If a Council can require an owners corporation to carry out fire safety upgrades to lot property, can the owners corporation recover the cost of performing those upgrades from the relevant owners?  There is no clear answer to that question.  Many owners corporations have introduced cost recovery type by-laws that purport to allow them to recover costs from owners in a variety of circumstances.  There have been several recent cases in which NCAT has invalidated cost recovery type by-laws.  But there are also cases where NCAT has upheld cost recovery type by-laws. Ultimately, if an owners corporation wants to seek to recover from certain owners the costs it incurs carrying out fire safety upgrades in their lots, a cost recovery type by-law will need to be put in place but there may be difficulty enforcing the by-law.

Conclusion

A Council is entitled to issue a fire order against an owners corporation that requires fire safety upgrades to be carried out to lot property.  Where that occurs, the Strata Act gives the owners corporation the right to enter the lots in order the do the work required by the fire order.  If an owners corporation wants to recover the costs it incurs carrying out fire safety upgrades in a particular lot, a cost recovery type by-law will need to be put in place for that purpose.  However, NCAT has recently raised question marks over the validity of cost recovery type by-laws so the recovery of those costs cannot be guaranteed.

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Strata apartments come with many perks for owners and tenants but of course, there’s also a downside with one of the biggest complaints being noise. As more and more people enjoy apartment living noise complaints have increased in recent times by 33%* and they continue to rise.

What are top noise complaints in strata?

• Barking dogs
• Power tools
• Loud music
• Alarms
• Construction/renovations
• Vehicles
• Wooden/tiled floors
• Children

And… some of the more unusual complaints in more recent times include:

• Tap dancing
• Assembling IKEA furniture
• Loud urinating at night is becoming one of the most common reasons for sleep-­deprived apartment dwellers
• Late night showers

What if your strata by-law neglects to mention specific issues around noise?

A well written noise by-law can go much further than the model by-law and provide residents with guidelines and time restrictions for when they can and can’t make noise. It also lets neighbours know their rights if they feel the need to make a noise complaint.

Did you know if your noise by-laws are insufficient or lacking clarity on noise related matters our specialist team of strata lawyers can assist you in updating or developing your noise by-law.

*NSW Department of Fair Trading

DOES YOUR NOISE BY-LAW NEED TO BE REVIEWED?

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

The NSW Department of Fair Trading have published information on the ‘fire safety regulations 2022′ with a fact sheet and FAQs explaining reforms in more detail. 

A timely reminder as the nights and days start to get cooler, winter will soon be here and as owners and tenants use heaters and other electrical items to warm apartments it increases the risk of fires in strata buildings as they choose to stay indoors and out of the cold.

What are the most common causes of fire?

According to Fire and Rescue NSW the most common causes of fires, especially in winter, are:

• Faulty electric and gas heaters
• Items placed too close to heaters
• Children knocking over heaters
• Portable outdoor heaters
• Overloaded powerboards
• Kitchen cooktops and appliances
• Wheat bags kept in bed
• Electric blankets
• Smoking and candles
• Electric bikes and scooters
• Buildings at risk with flammable cladding

Is your building fire safe?

Now is the ideal time to ensure you are familiar and up to date with the fire safety requirements for your strata building and to ensure:

• Your building has had its annual fire safety inspection by an accredited Fire Protection Association Australia (FPAA) inspector, and everything is in working order and in line with the NSW fire safety laws
• Your annual fire safety statement, which is mandatory for most buildings, is lodged with the local council and Fire and Rescue NSW

How do you help ensure your building is fire safe?

A ‘Fire Safety By-law’ can help ensure all tenants and lot owners are fully aware of the fire safety requirements they must obey and to not do anything that create’s a fire safety risk. 

This type of by-Law can also make tenants and owners liable for false fire alarm call out fees or for any damage they cause to the building. 

A ‘Fire Safety By-Law’ can greatly enhance the fire safety of your building, reducing your fire risk.

DO YOU NEED A FIRE SAFETY BY-LAW? CLICK HERE NOW!


DOWNLOAD YOUR FIRE SAFETY FACT SHEET HERE.

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.