Maintenance of and Upgrade of Residential Strata Building

18/03/2020

Watson & Watson were approached by the Owners of an apartment in a Harbour front Strata Apartment Complex consisting of six units.  There is one unit on each floor and each unit faces the Harbour.

The Building had concrete cancer and there was a requirement for some maintenance work on the facade.

All of the Owners agreed to the need to maintain the building by repairing the concrete cancer.

However the Owners could not agree as to the actual works to be undertaken. The Owners of four of the six units wanted to significantly upgrade the Harbour front façade of their units including changes to structural elements which would enable a greater vista to the Harbour.  The proposed works by the Owners of the upper four units while limiting some existing views from existing rooms, opened up vistas from other areas of some of those upper units.  These works as proposed by the Owners of the four upper units were not necessary as part of the Owners Corporation’s obligation to maintain the façade.

The works proposed by the Owners of the four upper units were at a considerable cost, significantly higher than the cost of the necessary works to be undertaken to rectify the maintenance issues. 

Our clients who owned one of the lower units had sourced appropriate windows which would upgrade the facade at a significantly less cost than those works proposed by the Owners of the four upper units.  These proposed windows would not adversely affect the view available from the existing configuration of the six units.

However our clients did not agree to the very significant upgrade of the window facades as sought by the Owners of the upper level units. The proposed upgrade works required a Special Resolution and an appropriate By-Law.  Having regarding to the unit entitlement, the Owners of the four upper units had sufficient unit entitlement to pass a Special Resolution for their preferred solution.

To enable a Special Resolution to be passed one also needs the Consent of each of the Owners who were to benefit from the Special By-Law.  Only the Owners of the four upper units who sought the unit works and upgrade consented to the Special By-Law.

Our clients engaged an Architect and appropriate Consultants and came up with a solution which would replace the front facade windows without reducing the vista from the existing building.  These were at a considerably lower cost than the proposal by the Owners of the upper four units.

Our clients’ Consultants were able to incorporate the changes sought by the Owners of the four upper units to have the façade replaced (without impeding the existing view); and also allowing the Owners of the upper four units to achieve their preferred outcome.

As expected at the General Meeting, the Special By-Law proposed by the Owners of the upper four units was passed by way of Special Resolution.

In the original discussions before the General Meeting referred to above, the Owners of the four upper units had not initially offered to indemnify the Owners Corporation from damages caused by the proposed renovations.  We discussed this with our clients and they discussed the matters with the representatives of the Owners of the four upper units.

Thereafter in the version of the proposed By-Law put to the General Meeting an indemnity was offered.  Each of the Lot Owners of the four upper units offered a joint and several Indemnity to cover losses of the Owners Corporation if the works were approved.

However there was no compensation offered by the Owners of the four upper units.

The New South Wales Civil and Administrative Tribunal (“NCAT”) on application by a Lot Owner would review a Special Resolution which was passed by an Owners Corporation and revoke the resolution if it was found that the Owners Corporation had acted unreasonably.

The failure to offer appropriate compensation would be a matter for consideration by NCAT if our clients chose to challenge the passing of the Special Resolution.

As an alternative to expensive litigation, which one could anticipate to proceed through NCAT, and possibly an Appeal Panel at NCAT and possibly by way of further appeal, we recommended that attempts be made to resolve the matter on the basis of incorporating the window design as sourced by our clients and allowing the other upgrades as sought by the Owners of the four upper units with appropriate costs adjustments and indemnity being provided by the Owners of the other four Units

We seek to resolve issues and find an acceptable resolution where possible, so that each party can achieve some benefit. 

In each case there are many issues and depending upon the circumstances, some are more important than others.  If you have issues in relation to renovating or upgrading a Strata Building or some part of a lot within a Strata Building, please contact Richard Watson, Senior Strata Solicitor or Shereen Da Gloria, his Personal Assistant of Watson & Watson experienced Building and Construction and Strata Lawyers to discuss your matter and obtain appropriate timely advice.

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