Your Remedy if the Owners Corporation fails in their obligations for example to maintain the common property

23/02/2018

The Strata Schemes Management Act 2015 (SSM Act 2015) has now come into effect and there are various cases dealing with the operation of that Act.  

There are many sections of the SSM Act 2015 which are similar to obligations that were imposed upon the Owners Corporation under the Strata Schemes Management Act 1996 (SSM Act 1996).  For example, the Owners Corporation’s obligations to maintain and repair the common property.  The SSM Act 2015 specifically requires the Owners Corporation to maintain the common property.  For example, see our article 17 March 2017.

In more than 90% of cases in which we are instructed on behalf of a Lot Owner we have been able to negotiate with the Owners Corporation to undertake the maintenance of the common property so as to comply with their obligations.

What are the remedies to the Lot Owner in the event that the Owners Corporation does not comply with their obligations under the SSM Act 2015 or other common law obligations?

The SSM Act 2015 sets out a range of possible orders that can be obtained in relation to property including the common property of a Strata Scheme.  The orders are set out in particular Sections within the SSM Act 2015 (Section 124-132).

The SSM Act 2015 suggests that the intention of the SSM Act 2015 is only to allow Lot Owners to obtain particular orders within those specified provisions.  Surprisingly those specific Sections do not refer to the right to obtain a particular order compelling an Owners Corporation to repair common property.  There are many other factual situations which we have come across, which are not specifically referred to, for example, there is no particular section of the SSM Act 1996 or 2015 which would allow an order that the Owners Corporation and take action to comply with a resolution which has been passed by the Owners Corporation for particular action to be taken.

One would have thought that the SSM Act would specifically allow orders to cover such factual matters which are inconsistent with the Owners Corporation their obligations.

In August 2017 in the case of Rosenthal v Owners SP 20211 NCAT considered this issue.

In Rosenthal’s case the Lot Owner alleged that the common property had not been kept in a state of good repair and this failure had led to water ingress into the Owner’s Lot.  The Owner sought an order that the Owners Corporation repair and replace a water proof membrane and undertake other work to ensure that water did not enter into the individual lot.

The Tribunal held that it had the power to make an order to compel the Owners Corporation to repair and replace the common property because of Section 232 of the SSM Act 2015.  This Section allowed the Tribunal to make an order which resolves a dispute.  The Tribunal went ahead and made an order that the Owners Corporation replace and repair the common property as requested by the Owner.

Applying this case suggests that the Tribunal could in some cases make an order in favour of the Lot Owner simply to resolve the dispute over the water ingress into the Owners apartment utilising the provisions of Section 232 of the SSM Act 2015.

This is a case which we understand, has not been appealed.  There is no certainty that when looked at more carefully such a case will be upheld by an Appeal Court.

In those circumstances we recommend that alternative orders be sought which are clearly available to an adversely affected Lot Owner by breach of the SSM Act 2015.

A possible order is an order appointing a Strata Managing Agent to be appointed to exercise all the functions of the Owners Corporation or particular functions of the Owners Corporation.  This is often referred to as a Compulsory Appointment of a Strata Managing Agent.

We have noticed that there are more disputes relating to the legal rights of the parties in recent times relating to firstly, the obligations of various parties involved in the management of the strata properties and secondly in enforcing rights and remedies available to the various aggrieved Lot Owners.

In 2017 there were many appealed cases which have clarified some of these issues. However many have resulted in outcomes being less certain.  This will lead to more appeals.

If you have issues relating to the operation of the strata management and the remedies that are available and options to resolve the matter please telephone Richard Watson or his Personal Assistant Shereen DaGloria to discuss these important matters so as to achieve the optimum outcome for you.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 02 9221 6011.