Sometimes it is confusing to understand the difference between repairs, maintenance, improvements and disposal of common property – listen to Tom Robinson as he unpacks the difference.
In a year dominated by COVID-19, vaccines and lockdowns, do not be surprised if you missed an equally significant headline from New South Wales’ highest court – the appointment of a building manager in a strata scheme!
When the Strata Schemes Management Act 1996 (NSW) was amended by the Strata Schemes Management Act 2002 (NSW), the legislation restricted a building manager from continuously extending an agreement for more than 10 years after the Amendment Act, including any term or option to renew the agreement.
Previously, a building manager could be engaged by an owners corporation indefinitely.
However, it appears that the recent appeal decision of Australia City Properties Management Pty Ltd v The Owners – Strata Plan No 65111 has, for the time being at least, affirmed the legislature’s intention when it introduced a 10 year limit on the appointment of a building manager in a strata scheme.
Australia City Properties Management Pty Ltd
In Australia City Properties Management Pty Ltd v The Owners – Strata Plan No 65111, there was a dispute between the building manager and the owners corporation regarding the term of the management agreement (“Agreement”), which was entered into on 30 March 2001 – before the Amendment Act.
While the Agreement, dated March 2001, was for an initial period of ten years, with an option to renew for three (3) additional terms of five (5) years, the building manager and owners corporation entered into two (2) deeds of variation (“Deeds”) in March 2010 and March 2015 – after the Amendment Act took effect.
The Deeds had the effect of extending the term of the Agreement beyond the 10-year limit, such that it had an expiration date of March 2041.
In August 2019, the owners corporation terminated the Agreement, on the basis that the building manager had been “grossly negligent” in performing its caretaking duties. The manager argued that the Agreement was not validly terminated and as such, was entitled to damages in the amount of $2 million. These damages were calculated on the basis the Agreement was for a (total) term of 40 years.
Supreme Court Appeal
The issue on appeal was whether the Deeds in 2010 and 2015 were considered “caretaker agreements” under the Amendment Act, such that they were limited to a term of 10 years.
In determining whether the Deeds were limited to a term of 10 years, the Supreme Court considered their “text, context and purpose”.
Given the purpose of the Deeds was to grant a further option under the original Caretaking Agreement, the Court held that the Deeds were, in fact, separate “caretaker agreements”, as defined by the legislation.
The effect of this is that the Deeds were “read down” to expire on 29 April 2025, rather than March 2041, such that the Agreement was limited to a term of 10 years.
As a result, any award of damages to the service contractor for unlawful termination of the Agreement would be calculated up to April 2025.
While Australia City Properties Management may ultimately reach the High Court of Australia, for the time being at least, the decision by Chief Justice Bathurst has provided guidance on the term of a management agreement in a strata scheme.
Will Queensland follow?
While the term of appointment for building managers in NSW strata schemes is (currently) capped at a maximum term of 10 years, the same cannot be said of schemes across the border.
In Queensland, bodies corporate which are regulated by the Body Corporate and Community Management (Accommodation Module) Regulation 2020 (“the Accommodation Module”) may appoint a service contractor for a maximum term of 25 years, including any terms of extension.
And if you thought snap lockdowns were long…
Bodies corporate regulated under the Body Corporate and Community Management (Standard Module) Regulation 2020 are currently restricted to a term of ten (10) years.
Given the significance of the decision in Australia City Properties Management, it will be interesting to see if Queensland follows the lead of New South Wales and implements a limit on the term of a caretaking agreement for schemes regulated under the Accommodation Module.
OMB – Specialist Strata Professionals
OMB Solicitors’ specialist strata practitioners have recently seen a number of building managers attempt to circumvent the 10-year limit by requesting owners corporations extend their management agreement beyond this term.
Owners corporations should consult with OMB Solicitors when reviewing (or varying) the terms of its management agreement, to ensure it complies with the legislation.
Today, I was wanting to speak about some of the changes and one, in particular, that’s occurred in our modules. As we all know in our body corporate industry, our modules changed on 1 March 2021. With respect to one of those changes, it is a requirement for a body corporate at its second Annual General Meeting to put up a motion.
So it’s a motion proposed by the committee that the body corporate lawyers Gold Coast resolves to obtain an expert report of the whole of its building dealing with residential building defects. As a result of that change in the legislation, we’ve had a number of inquiries from body corporates and committees about, well, if the legislation says we have to do it at the second Annual General Meeting, does that mean we can’t do it at the third Annual General Meeting, or can we only get one report? Or if we don’t get that one report, have we missed our opportunity? So we’re going to answer some of those questions.
A body corporate, with respect to submitting a building defects report either to a builder to carry out rectification work or to go to QBCC, can submit any number of reports and make any number of claims to QBCC for the rectification of residential building defects. In addition to that, a body corporate or a committee can make a decision to procure so to facilitate and engage experts to do any number of expert reports regarding their building. And that could happen at the first Annual General Meeting and anywhere up to the 10th Annual General Meeting.
The purpose of the change in the module is simply to bring the matter to the attention of the body corporate and its committee to say you are a new building. During the first three to six years of your body corporate that potentially could be latent defects or in the earliest stages of your building, there could be minor defects while the builder is still around. And we want you to put forward that motion where it’s a legal requirement for you to obtain a defects liability report about residential building defects affecting your building. That’s all that section really deals with.
From my perspective, I wanted the legislators to go further with their change to the module. I wanted the legislators to do what we recommend body corporates do, which is at their first Annual General Meeting.
So this is the first time that a body corporate is in control of the meeting after the initial period from the original owner. But at that time, it consider the type of motions to go on its first Annual General Meeting, and at that time, say we want to hire an independent expert to look over all our aspects of common property and report to us as to whether or not there is any problems within our building. Because at that first Annual General Meeting, it’s quite possible that the original owner, the developer, still exists and that the builder is still attending to other defects pursuant to the building contract it signed with the original owner.
So I would have liked the legislators to have actually made it mandatory at that time for a body corporate lawyers Gold Coast its first Annual General Meeting to specifically deal with those residential building defects. Obviously, this is a very big topic at the moment, particularly when we look at what happened in Miami in the United States with the falling down of that building and we’ll certainly learn a lot in the future with respect to those types of buildings, but particularly here in Queensland where we have substantial building work and new builds going on at the moment which are in the vicinity of the beachfront, they’re built on sand, are affected by weather, are affected by poor building practices and are affected by sinkholes. We are going to really need to focus in the future on residential building defects and we need to start looking at those issues now.
So just a reminder when you’re dealing with a new build and particularly at your second Annual General Meeting, remember the new requirement in the module. But based on my recommendation, take it a step further and deal with those issues at your first Annual General Meeting.
Thank you very much for taking the time to listen to me today. As you are aware, I’m Juliette Nairn of OMB Solicitors and residential building defects and dealing with them from a body corporate lawyers Gold Coast perspective is something that I have done since 1997 and it’s something that I’m quite passionate in making sure that we’re increasing the building standards within our body corporate buildings, particularly in Queensland.
The sudden collapse of a Miami apartment block on June 24, killing more than 98 people, made headlines around the world and focused attention on the horrific consequences of unaddressed building defects.
Initial findings on the collapse of the Champlain Towers South in the Florida suburb of Surfside suggest long-term degradation of reinforced concrete supports in the underground parking garage caused by water penetration from a leaking pool was a major factor.
In Australia, the increasing popularity of living close to work, retail and transport facilities means ever more high-rise apartments in our major cities and regional centres. As a result, developers rapidly construct new blocks to meet the demand, not always with the rigour required of modern construction and building codes.
High profile local cases of building defects such as the slanting of Sydney’s Opal Tower and the fire at Melbourne’s Lacrosse building have highlighted some of the legal issues involved for owners in such properties, which we’ll look at in this post.
Building defects and strata properties
A building defect can be caused in a number of ways, from faulty workmanship to poor design, use of defective materials, or a failure by a builder to follow standards set out in the National Construction Code.
For a fault caused by any of these means to be considered a defect, it must carry the risk of damage or destruction to the building or make it unable to be used for its intended purpose. This is considered a major defect.
A minor defect, by contrast, is any defect that is not a major defect and will usually be a cosmetic fault.
Common building defects include damage caused by inadequate waterproofing or cracks which appear in walls, ceilings and floors due to issues with a building’s structure.
In Queensland, a building defect is a faulty or unsatisfactory work under the terms of the Queensland Building and Construction Commission Act (‘the Act’).
Under the Act, statutory warranties exist in relation to new buildings, enforced by the QBCC. Within these periods, the builder is responsible for remedying any defects.
Defect liability periods in Queensland
Defect liability periods are the time limits in Queensland within which an owner or body corporate can make a claim against the builder to remedy defects.
Structural, or major, defects such as water leaks, major cracks and structural failure have a defect liability period of six years + six months from the ‘practical completion’ date of the building in Queensland.
Non-structural defects such as frayed carpet, or paint and tiling defects, for example, have a 12-month defect liability period.
Once a defect is detected and known about, it must be reported to the builder within 12 months through lodgment of a defective building work complaint with the Queensland Building & Construction Commission.
Defects found on both individual and common property in strata properties are covered by the statutory warranty. The body corporate may bring an action to have the defect remedied on behalf of a lot owner.
It’s important for a body corporate to act quickly once a building defect is known about as after the expiration of the warranty, responsibility for rectification will generally fall on the body.
It should be noted that a body corporate is not responsible for building defects within lots unless those defects relate to the structure of a building and the building was created in a building format plan.
Strata insurance claims
Strata insurance is taken out by a body corporate to cover public liability, damage to common property and common area contents, theft, recovery after a catastrophe, and legal liability for office bearers.
Many strata insurance policies include excluding any loss or damage arising from an existing defect in the building’s construction and/or design.
Such exclusion may leave a body corporate with limited or no cover in relation to building defects.
Bodies corporate should also check a similar exclusion is not part of the public liability coverage of the policy so that they are covered in the case of personal injury that might result from a building defect.
A body corporate can reduce its exposure by establishing the practical completion date of the building and being aware of the statutory warranty period; commissioning a defect report well before the expiry of the warranty; actioning any defects identified in the report before the liability defection period expires.
Consult specialist legal professionals
OMB Solicitors’ specialist practitioners in this area of the law mean we regularly advise bodies corporate on the complexities of strata insurance policies when building defects arise in buildings.
We will help advise on the fine print of the policy. We will also provide a body corporate with the right advice to enforce rectification of defects through the QBCC, or a separate contractual claim against a developer or builder in relation to defects.
Call us Gold coast Solicitors today if advice is required on any of the issues raised in this article.
Thank you for taking the time to log on today and have a look at this video. This video that we are doing today is focusing on that particular first Annual General Meeting of a body corporate where the original owner is extracting themselves from the strata scheme and the new lot owners are coming through.
In our property market at the moment, we’re going through a property boom. We’re seeing a lot of new builds occurring within our body corporate industry. And as a consequence, I thought this was a great time to talk to body corporate managers and brand new committees about what happens at the first Annual General Meeting.
I actually call it the conflict of the first Annual General Meeting. And the reason why I call it a conflict is because on one side you have the developer who was the original owner. In the middle, you have your body corporate manager and then on the other side, you have the new committee who’s being introduced to the building. At the first Annual General Meeting, and prior to that, there might be an inaugural extraordinary general meeting, there are a number of matters that get ticked off.
Now, an original developer is aware of that. But we find when we attend buildings with the first twelve months of a body corporate committee, the committee actually doesn’t understand a few key points which need to occur, such as what is the date the strata plan was registered? That’s important because we want to know when time frames start to run from for the creation of this body corporate. Secondly, do we have an occupation certificate and what was the date of practical completion under the building contract? Thirdly, what documents were handed over by the original developer at that first Annual General Meeting? Did they hand over the building contract? Very important because we want to know that the building contract was handed over. Why? Because Section 36 of your Body Corporate Community Management Act says when the new body corporate is created and your original owner-developer starts moving out, the body corporate has the subrogated rights of your developer of the original owner. So pretend just like insurance.
The body corporate committee stands in the shoes of the developer and it has all the rights and responsibilities pursuant to that building contract. And that’s great from a body corporate perspective, it’s something in the Queensland legislation that’s very important for a body corporate because it gives the body corporate rights. It gives them rights to make sure that the work is done to a standard pursuant to the building contract. It identifies the retention money which may still exist within that first six to twelve months from the date of registration of the strata plan. If there is retention money, then the body corporate, it owns the common property and the assets. It needs to have a say on whether or not are there residential building defects that need to be repaired?
And should we investigate those while the original developer still holds some retention monies to be paid to the builder which may be need to be spent on the building. Okay.
A next document to look for is the construction drawings. The built. How is this building built?
Is everything included that we expect to be included? Exclusive use areas? Are the exclusive use plans done properly? And again, has every lot owner been allocated their exclusive use area?
These are all issues which are important to look at at the first Annual General Meeting and the last issue I think is also extremely important and often overlooked. At the first Annual General Meeting I would like to see our body corporate managers and our original owners and bodies corporate putting forward a motion which says here is the body corporate asset registry.
So for example, if you’re moving into a new building that has a gymnasium and all the gym equipment was supplied by the original developer and paid for by the original developer, that becomes a body corporate asset and then is included on the asset registry.
At the first Annual General Meeting has the developer gifted those body corporate assets to the body corporate or has the original developer put a line item in the sinking fund that says no you the body corporate needs to raise money and you need to pay for those body corporate assets. They’re not a gift. If that is something that is clarified at the first Annual General Meeting and in my view it’s something that should be gifted to the Body Corporate Lawyers Gold Coast then often that takes away an argument that can occur later down the track.
These are a number of the things which I would like our committees, particularly the new committees and our body corporate managers, to consider at the first Annual General Meeting of their body corporate. Again thank you for taking the time to listen.
As you know my name is Juliette Nairn. I’m a Partner with OMB Solicitors and at the moment with our property boom we’ve been attending a lot of first Annual General Meetings and these are some of the tips and tracts which have come up at these first Annual General Meetings.
Hi everyone, my name is Tom from OMB Solicitors and today I wanted to have a quick topic talk about material change of use applications in bodies corporate.
I’ve been getting a few queries about these material chains of use applications which are coming obviously from owners within bodies corporates who want to lodge an application to the local council for a material change of use of their lot. So as you may expect, most commonly these are for short term living changes, but we’ve also seen some other schemes that are wanting to change or owners are wanting to change the use of their lot. And I think that might be partly factor to the current market situation and circumstances that we’ve had and some effects from COVID.
And with that request from those owners or the owners’ desire to put a material change of use application to council, if it’s in a body corporate, it actually needs approval or consent from the body corporate which can be given depending on the circumstances, either by a committee resolution or ultimately a general meeting resolution of all owners.
Now the reason that there is a requirement for an owner to get that initial consent is because obviously material change abuse application for a lot in the body corporate may ultimately have an impact on current property. Now that’s not to say that it definitely will. What’s most interesting about this is the lot owners’ request usually to the body corporate for its consent is simply a consent by the body corporate to agree to the owner lodging its application with local council.
So that’s just the starting point for the owner to actually lodge its application to Council. So the first notification to cancel that the owner ever wants to consider a change of its use of the lot. Now bodies corporates quite commonly have been quite opposed to giving the consent to those material change of use applications, mostly because they might not be that supportive of what that lot has been changed to be useful, such as short term letting, which is always a topical topic on its own. But unfortunately, when bodies corporates have been withholding its consent to those requests by those owners to that application, adjudicators when it’s gone to the Commission’s office, have decided against the body corporate and overturned those decisions by either the committee or the owners at a general meeting. And the main reason for that is because the adjudicators in the adjudicators view the request for consent by the owner is simply that it’s just allowing the owner to actually lodge its application initially with Council.
So in actually determining the application to change the use of the lot and all of those factors that go into that, that is a matter within the jurisdiction of local council only and not one that the body corporate can have a say or restrict on.
And that’s consistent obviously with our legislation and usually the bylaws which were by a bylaw cannot actually lawfully affect the dealing with a lot. So in other words if an owner does lodge a material change of use application and Council approves that application that’s the decision by Council and that’s in the jurisdiction of Council to make that decision not the body corporate.
However, that doesn’t mean that if there are further requests and decisions to be made by the body corporate regarding the use of that lot that the owner is no longer bound by the legislation required to get the consent from the body corporate for those other changes and an example of that is let’s say the owner had to improve their lot and part of those improvements would impact common property so an improvement to common property, that would then obviously require another consent from the body corporate at a general meeting likely or if there was a buyer talking about renovations of lots then the owner would obviously have to comply with that by law and get the body corporate consent in that situation too.
So I guess in summary and to wrap up this topic is when those applications come across all those requests to bodies corporates to give its consent to those applications whilst everything needs to be examined on a case by case basis, they’re usually just a request to allow the owner to lodge its application and remembering that it’s ultimately a decision for local council as to whether or not that application is going to be approved usually with significant conditions or denied but that does not mean that the body corporate loses any right in the future to have a say as an objecting to the application once it’s launched or of course if there are any further requests that are required by the body corporate such as improvements that the body corporate will obviously have the ability to make a decision on.
So a very interesting topic and one that seems to be coming about a lot but of course if there are any questions on that topic we’ll or any other body corporate matters, please do not hesitate to contact me.
Hello, my name is Elisha, Solicitor at OMB Solicitors. Today I’m going to be talking to you about our three top tips in ensuring a smooth and efficient levy recovery.
The first tip we have for you is keeping our records up to date by including all contact details for lot owners that are referred to levy recovery. It is imperative that when an owner is in default that we are able to quickly communicate with them to bring the debt to their knowledge and attention. Now that includes reviewing the format and see if there’s any other contact details on the file which will assist us with that recovery process.
Now, the second point I’d like to raise is in relation to arrears. Now, if an owner is in arrears of more than 90 days, then this needs to be red-flagged straight away because the older the debt, the more difficult it is to recover. So what we need to be doing at this very point is looking at our age status reports to see what owners are currently in the 90 days arrears and starting to think about whether or not they need to be referred to levy recovery.
Now, the third tip is engaging your legal advisors early to assist with a recovery action. Like I said, when the debt starts to escalate, it does become more difficult to recover and that’s especially the case in circumstances where interest will start applying on outstanding contributions come 1 May 2021. So it’s really important that with your buildings, you are completing your age debtor’s reports, you’re considering which owners are sort of starting to get to that 90 day arrest time frame and starting to discuss these matters with your legal advisers to see if you can quickly and efficiently recover those debts on behalf of the body’s corporate.
Now, also, a final tip is in relation to communication when it’s referred to legal recovery. it is important that when an owner is referred to legal recovery or levy recovery that you cease all communication with that owner directly. So whether or not you’re a committee member or a body corporate manager, it does make it particularly difficult if a matter has been referred to levy recovery and there’s communication coming from a number of different key stakeholders such as the lawyers, the committee members, the body corporate managers, it does make it far quicker and easier to resolve debt when there is only one point of contact in that process.
Now, as a final point in relation to our COVID relief legislation, as we know things are starting to slow down a little bit now and penalty interest will start up again on 1 May 2021.
So it’s really important that committees start thinking about their buildings and getting on top of those levy arrears to ensure that when that 1 May 2021 time frame comes around, there are not many owners that are in arrears that will suffer as a consequence of the penalty interest starting to accumulate again.
Now, if you have any questions at all or if you would like us to review any of your age debtors reports for your buildings to see whether or not matters need to be referred, please don’t hesitate to send them through to us and we will review them at absolutely no charge.
For your committee to ensure that we can get on top of those very quickly and efficiently and to ensure that you’re in safe hands, so feel free to give us a call and we’ll be happy to help. Thanks.
Hi everyone. I’m Tom from OMB Solicitors and I work in our Body Corporate Lawyers Gold Coast team here.
Today I wanted to have a chat with you about our new body corporate regulation modules. And as you may be aware, these modules are a reform of our legislation regarding those regulation modules and that will commence from the 1 March this year. As a bit of background to those modules, it has been making in time for quite a long period, being almost eight years.
And what we’ve seen is recommendations being considered. There were originally 64 recommendations that was narrowed down to and we’ve seen a number of those recommendations now being implemented. So I thought today would be a good opportunity just before those regulation modules commence on the 1 March to look at some of the main changes that we’ve seen from this reform.
A large part of that reform is a modernisation and I think that’s an important note because what we’re dealing with is a modernisation of our regulation modules where we are bringing the modules up to practices that are already applied throughout the industry. So as you may suspect, a large change to our regulation modules relates to electronic means.
So that is electronic voting, electronic meetings, attendance, electronically video conferencing, teleconferencing and the like. It also means the ability to hold ballots, whether they be open ballots or secret ballots via electronic means. Of course, there has to be certain software upgrades and updates there, but at least the legislation now contemplates the electronic update, let’s call it.
Obviously, that was a big push because of what we went through in 2020 where Bodies Corporate were faced with the predicament of having to comply with the legislation with respect to holding of meetings and attending and having owners attend and vote at meetings when the legislation didn’t appropriately deal with those electronic access voting attendance issues. And that has probably been a very big push of why the modules have now been implemented at this time. They will be known as the 2020 regulation modules.
So what I thought I’d do now is talk about five of the main changes that we’re seeing other than, as we call it, the electronic update. So one of the more interesting update changes that we’ve now seen is the ability for lot owners to submit a motion to the committee for consideration at a committee meeting.
Now that might seem like something that happens quite frequently, but the reality is under our current legislation, owners can only submit a motion to be considered at an EGM or AGM, but the legislation now will allow for lot owners to submit a motion to a committee meeting.
What you may recall is committees deciding matters on behalf of owners such as pet applications or renovation applications. But that delegated authority that is given to the committee to be able to make those decisions is given through the bylaws, not necessarily the fact that a committee must consider someone’s motion that’s put to them. Well now that will change and lot owners will certainly be able to do that. There might not be a huge impact from that because there certainly are going to be restrictions around how that will operate and work, such as owners can only submit so many motions within twelve months. And obviously, if the motion is invalid or a restricted issue, then it doesn’t have to be considered.
There will obviously also be time frames on the committee that will be imposed as to how frequently and how quickly they must consider that motion. As it stands, if a committee receives a valid committee motion, it’s got six weeks to determine it. So that will be an interesting one to see how that plays out and whether there is a large impact on that other than realistically the requirement to have the motion determined within six weeks.
Another aspect that will affect committees will be the ability for a voting member of a committee to be considered a debt a member. So what that means is if a committee member now owes a body corporate debt, such as they haven’t paid their levies, they will lose their entitlement to vote at a committee meeting.
So as you may be aware, currently that only applies at an EGM or AGM. Being an owner loses their entitlement to vote if they owe a body corporate debt. Now this will apply to committee meetings as well. I think that was something that probably was always intended, not necessarily regulated, and now that has been regulated in the new modules.
Moving on to one of the other main amendments that we’re seeing and probably the main one that will cause a bit of grief, I think to start with, is the abolishment of motion by alternatives and it will now be considered and called a group of same issue motions.
So this will be a very topical matter, I think for bodies corporate is worth the change whereby under our current legislation, if there are two or more motions submitted that deal with the same issue, a body of corporate must put a motion, so one motion, and then list the alternatives. So there requires a bit of creative redrafting there of the motion itself and then the alternatives are listed. So the owners only get to vote once and choose one alternative. What will now occur is that won’t exist and it will be called group of same issue motions. So if a body corporate receives two or more of the motions of the same issue, all the motions will be put, but they will be designated and deemed a group of same issue motions whereby every owner can vote on every motion and you may get a result where multiple motions will actually deem to be have resolved.
But there will be a process to determine which is actually the resolved motion so that one will be a topical one I think that will cause a bit of confusion and a lot of change in terms of how we do some practices but one to be mindful of moving from the 1 March.
Another good update that we’re seeing is the ability to change a quorum. So currently it’s 25% of voters at a general meeting gives you a quorum that is going to now change to between 25% and 10% if the border corporate resolves a special resolution. So there are a lot of schemes out there, specially the investor owned schemes that will struggle to get 25% of the number of voters to make a quorum at a general meeting. That can now be amended to not less than 10% and not more than 25% if you resolve a special resolution at a general meeting.
So a good update, one that’s going to probably assist a lot of those investor owned schemes. The final one I thought I’d talk about today is closing an industry loophole regarding Powers of Attorney. So you may recall there was obviously a period there Where there was what we call proxy farming where owners would go out and farm and gather as many properties as they could so that they could vote with multiple votes, really and that got closed by the last and current modules Where there is a percentage limitation on how many owners can hold. So what the loophole that was found related to powers of attorney where an owner realistically could hold as many powers of attorney as they wanted and in some instances owners were holding ten to almost £100 of attorney for one owner which gave them a voting majority that has now changed and owners can only hold one.
Obviously there are exceptions to that such as if you have a power of attorney for a family member that won’t necessarily count towards your one power of attorney that you can hold and certainly no change to when developers hold powers of attorney under contracts of sale, usually at the original development stage.
They’re the five main amendments that I thought I’d chat about today and probably some of the more interesting ones that we’ve seen from the regulation modules outside of, as we called it, the electronic update.
If you’ve got any questions, of course, about any of those changes or any other changes to the new regulation modules, please do not hesitate to contact us here at OMB Solicitors.
The “war” regarding pets within bodies corporate has been seething for a long period of time.
This “war” continues as a result of a recent case in NSW. I am not going to bore you with the details of Cooper’s case1 as they have been widely reported and commented on in other forums2. If you would like to, you can read the full 55-page decision: see footnote.
However, this NSW Court of Appeal decision is not just another “dog case”. What I particularly want to discuss in this article, is what guidance can we obtain from the judiciary regarding by-laws and how do we implement that guidance in the future?
Due to the Covid-19 pandemic, people have been spending a lot more time in their residential accommodation and consequently, everyone wants a pet!
In NSW and VIC, walking an animal became one of the few outdoor activities that was tolerated under the restrictions. For people’s mental health, the joy of keeping a pet in their residential accommodation has been a priority to many.
So how does this impact within our Strata world? Basically, more people are seeking to have a pet (or two) within their scheme.
As a consequence, all bodies corporate (through their committee) should look at the wording of their “pet/animals” by-law and ensure that it is suitable for their scheme.
How do you enforce a pet by-law?
The starting point is to make sure your by-laws are drafted properly. The Judges in the Cooper’s Case were critical of the language used in the pet by-law (ie, how the pet by-law was drafted), but their comments went even further. Specifically, stating “the language of S136(1) is awkward” – see below:
“1363 Matters by-laws can provide for
- By-laws may be made in relation to the management, administration, control, use or enjoyment of the lots or the common property and lots of a strata scheme.
- A by-law has no force or effect to the extent that it is inconsistent with this or any other Act or law.
The subject matter of the by-laws appears to be three functions (management, administration and control) operating in relation to specified subject-matter (lots, or common property and lots, within a strata scheme).”
The language is deemed “awkward” because it does not aid the drafter of by-laws. Can I really draft a by-law that impacts on the “enjoyment of a lot”? I think not.
Although the Judges were commenting on NSW strata title laws, these are very similar to the laws in our QLD legislation. As a result, the Cooper’s Case provides us with guidance regarding how to draft a valid and enforceable by-law.
The starting point being that a lot owner’s indefeasibility of title with respect to the right of what they can and cannot do within their Lot must not be constrained by the power to make a by-law.
In other words, a by-law cannot impact on the individual rights of lot owner. By-laws are a necessary and useful tool within a Body Corporate to assist the committee in regulating common property activities and the relationships between owners, residents and other stakeholders in a scheme. By-laws need to be carefully drafted and should not simply be copied from someone else’s scheme. Also, by-laws should not deal with (or be reactive to) a one-off situation.
By-laws cannot ban pets
Once you have a well drafted pet by-law, if a resident (owner or occupier) would like to keep a “pet”, then it will make a “pet” application to the committee. Due to Cooper’s case, the committee will actually need to properly consider the application on its merit.
When we are dealing with dogs, the committee will also need to consider other legislation. For example, if a person has a recognised disability under the Guide, Hearing and Assistance Dogs Act 2009 (QLD) and relies upon the animal for assistance, the person does not need to ask permission before bringing a guide, hearing and/or assistance dog into the Body Corporate.
Certified guide dogs (either in training or fully trained) with their approved handlers have the right to enter public places, public passenger vehicles and places of accommodation. This includes shops, cinemas, cafes, restaurants, clubs, holiday accommodation, rental accommodation, Body Corporate buildings, taxis, planes, public transport and entertainment and sports venues.
The Guide, Hearing and Assistance Dog Act 2009 protects these rights and imposes penalties for people (including bodies corporate) that breach this legislation.
For a committee to appropriately identify a certified dog, look for the round blue and white cloth badge and/or harness for guide, hearing and assistance dog’s (there may also be other dog badges or brandings).
An approved handler (including those who have an alternative handler helping them to physically control the dog), trainers, and puppy carers, accompanied by a certified dog or dog in training must always carry an approved guide, hearing and assistant dog’s identify card.
It is for the committee and lot owners to understand that certified guide dogs, hearing dogs and assistance dogs are governed and protected by the Guide, Hearing and Assistant Dogs Act 2009 (QLD) – please ensure these individuals and their animals are protected from discrimination.
Concerns abouts pets
Owners and occupiers often have a range of concerns about having animals (including dogs) in a Body Corporate. The main issue for a Body Corporate appears to be the likelihood of a negative impact upon the common property or maybe a person living at or visiting the Body Corporate.
In my view, the majority of these genuine concerns of Lot owners can be appropriately addressed and eased by setting reasonable conditions within the by-law.
What about a companion animal?
A “companion” animal is very different to a certified or approved assistant animal.
An emotional support animal (including a dog) provides support through companionship and it can help ease anxiety, depression and certain phobias. A guide dog (which is a service dog) is generally allowed anywhere the public is allowed.
However, Emotional Support Animals (ESAs) are not.
For example, ESAs generally cannot accompany their owners into restaurants or shopping malls.
ESAs refer to dogs and other pets that provide emotional support and comfort to their owners on a daily basis. ESAs legally must be prescribed by a licensed mental health professional like a therapist, psychologist or psychiatrist.
Service dogs (i.e. guide dogs) have been trained to perform specific tasks for individuals and as such are usually granted access to go anywhere their owner goes.
This is different to an emotional support animal because it does not require any specific training.
Where to from here
Dealing with a beloved family pet requires the Lot owners and a Body Corporate Committee to be fair, compassionate and objective. Obviously, the starting point is having an appropriately well worded, delicately drafted by-law. Pursuant to the by-law, an owner, occupier or a guest (in other words any invitee) to the Body Corporate will be entitled to have their guide, hearing and assistance dog on-site to assist the person with the services for which the dog has been trained.
This is very different to the position where the invitee to the common property of the Body Corporate has a companion pet.
The Lot owner or occupier who has the companion pet will need to complete an appropriate pet application and such a pet will be subject to the same conditions as all other residents within the building.
For the purposes of our Queensland Body Corporate Legislation, there is no difference between a treasured family pet and an emotional support animal.
OMB Gold Coast lawyers specialises in acting for bodies corporate and preparing well worded and delicately drafted by-laws. If you require any assistance with your by-laws, please do not hesitate to contact our Family Lawyers Gold Coast.
2 Cooper v The Owners – Strata Plan No 58068  NSWCA 250 (23 September 2020)
3 Strata Schemes Management Act NSW
A unanimous decision of the NSW Court of Appeal last month has sparked discussion regarding the enforceability of By-Laws within Bodies Corporate.
The Appeals Court invalidated the ‘no-pet bylaw’, identifying that such a by-law is “oppressive”.
How does this decision impact Bodies Corporate in Queensland?
COVID-19 has had a significant financial impact on individuals, businesses and Bodies Corporate alike. As a result, the Queensland Government passed the Justice and Other Legislation (COVID-19 Emergency Response) Amendment Act (“Amendment Act”) which amended the Body Corporate and Community Management Act 1997 (“BCCMA”) to assist individuals that have been financially affected and in turn support the wider Strata Community.
The Amendment Act came into force as of 25 May 2020 and will remain in place until 31 December 2020.
The existing position was that Bodies Corporate have a statutory obligation to recover unpaid levies together with the approved interest and the reasonably incurred recovery costs of seeking recovery of the unpaid levy. The changes represented in the Amendment Act overcome the need for Committee’s to consider waiving a proportion of the debt, for example the interest component as considered previously, given the current social and economic impacts of COVID-19.
The Amendment Act and what it means for Owners, Committee’s, Managers and Others, is as follows:
Sinking Fund Budgets
A key change is that a Body Corporate, may, by ordinary resolution, adjust the sinking fund budget for the current or future financial year by removing some or all of the anticipate major expenditure.
Where a Body Corporate does utilise the benefit of the Amendment Act to adjust the sinking fund budget, and amounts have been paid by owners towards the budgeted expenditure then the Body Corporate “must” refund the owners the amount paid on account of that component.
Should be noted that lot owners are not required to request the refund and Bodies Corporate and Committee’s should be weary of their obligations to avoid contravention of the Amendment Act.
For example, a scheme maybe in need of rectification works and $200,000.00 has been allocated to be collected from the owners, with a proportion to be collected within the current period and the remaining to be collected at a later date. The resultant effect is that this may be removed from the budget of the Body Corporate, if agreed by ordinary resolution. This further reduces contributions payable by lot owners.
While this seems to be a worthwhile short-term relief for owners, come 1 January 2021, the budget expenses that have been removed will be required to go into the following budget and will be collected from all owners.
This is a short-term fix. This should not be a course to be adopted where sophisticated sinking fund forecasts are not in place to determine what may be deducted and refunded to owners within the Body Corporate.
Amending the due date for Contributions Levied
Another takeaway from the Amendment Act is that Committees can alter the due dates for payment of levy contributions to the last date of the Body Corporate’s financial year. This is to provide lot owners who are suffering financially as a result of COVID-19 a further period in time to pay their contributions.
This is not a restrictive issue and can be applied on a discretionary and selective basis, or alternatively may be applied to every lot owner.
Again, cash flow forecasts are an important consideration should the Body Corporate wish to invoke the use of this Amendment.
Penalties for Late Payment
We are well aware that Bodies Corporate can charge interest at a rate of 2.5% per cent per month on outstanding contributions.
A significant amendment is the prevention of Bodies Corporate from charging penalty interest on outstanding lot owner contributions until 31 December 2020. This is further inclusive of interest on outstanding levies that had been accumulating prior to the COVID-19 pandemic.
An account requiring payment of a contribution instalment given to an owner of a lot 2 months before the commencement is not paid until 1 February 2021. The owner is not liable for a penalty for the contribution instalment being in arrears during the relevant period. However, the owner may be liable for a penalty for the contribution instalment being in arrears before and after the relevant period.
This however does not prohibit a Body Corporate from taking action to recover outstanding Body Corporate debts all together.
This amendment should not be used as an excuse for not attending to payment of your contributions as and when they fall due. Come 1 January 2020 interest will be reinstated and will accumulate at a rate of 2.5% per month on outstanding levies.
OMB strongly suggests that all outstanding arrears be satisfied prior to 1 January 2020 to avoid interest accumulating and prevent the institution of legal proceedings for the recovery of the outstanding levies.
Recommendations and takeaways:
- The Body Corporate should act reasonably in dealing with financial management and when presented with payment plans;
- Payment plans should be settled and satisfied prior to 1 January 2020;
- Bodies Corporate should be aware that the Amendment Act is a short-term fix and should be mindful of the forecasted future and financial stability of the Body Corporate; and
- Employ sensible and practical solutions to assist with the financial hardship of owners.
You can review the COVID-19 emergency financial management legislation here.