Repairs by Owners Corporation or Lot Owner?

13/06/2016

Watson & Watson are experienced Lawyers dealing with all aspects relating to Building and Construction and Strata related matters.  Often Watson & Watson Strata Lawyers receive enquiries from existing and new clients and provide advice in relation to issues regarding the responsibility of the Owners Corporation (OC) and/or Lot Owners to maintain the property owned by a particular Lot Owner or often the common property.

The OC must look after common property and do all repairs, unless it is decided by special resolution that it is inappropriate for a particular item and this decision will not affect the safety or appearance of the Strata Scheme.  This includes replacing and renewing common property when needed. (Section 62)

The OC can decide at a General Meeting by a Special Resolution to do or allow a Lot Owner to add, alter or erect a new structure that improves or enhances common property.  If the ongoing maintenance for any alteration, addition or erection is to be the responsibility of a Lot Owner, a by-law must be created specifying the responsibility of the Lot Owner in this regard.  Otherwise the OC is responsible for the ongoing maintenance of those alterations. 

Careful consideration must be given as to the benefits and deterrents of either the Lot Owner or as an alternative the OC, having the responsibility in relation to those alterations or additions.   Often who should be responsible will depend upon the work to be undertaken and the consequence failure of the work.

If a particular problem in relation to the building arises the Lot Owner and the OC should carefully consider who is responsible by the rectification of those defects. If the OC is responsible there are many problems that a Lot Owner will face if the Lot Owner takes it upon him or herself to carry out the rectification works immediately. However if there is urgent requirements then it is necessary to contact the OC, Strata Manager and take steps to mitigate the losses that protect the property.

The relative obligations, responsibilities and procedures are regulated by the Strata Schemes Management Act 1996. This Act is subject to in excess of 90 amendments which were to take effect on 1 July 2016 however the commencement date has been delayed.  The experienced team at Watson & Watson can assist in relation to the current and the proposed changes.

An example of the difficulties that arise set out in the case of Hoyle v All Pro Building Services Pty Limited (Home Building) [2011] NSW CTTT 271 decided in 2011 by the Consumer Trader and Tenancy Tribunal [the forerunner to the NSW Civil and Administrative Tribunal (NCAT)], Mr Hoyle the Lot Owner of the Penthouse which had an extensive tiled balcony, as a result of movement over years had deteriorated. The Lot Owner Mr Hoyle entered into negotiations with the original Builder.  Mr Hoyle was unsuccessful in having the Builder rectify the tiling.  Subsequently Mr Hoyle engaged his own Tiler to examine the tiling and obtain an expert report.  The report found extensive failure to the tile adhesive and waterproof membrane and recommended removal of the tiling and replacement of membrane.  As a consequence Mr Hoyle commenced proceedings against the Builder in the Tribunal seeking an Order that the Builder rectify the defective work.

Mr Hoyle struck an Agreement with the Principal of the Builder as to compensation and subsequent Mr Hoyle purchased new tiles and engaged a Tiler to remove and replace the balcony tiles at his expense. 

The Agreement reached between Mr Hoyle and the Principal, provided that the OC provide the Builder with a Deed of Release as a precondition of Mr Hoyle receiving the agreed compensation.

Mr Hoyle after the Agreement but before the obtaining of the OC release purchased tiles and engaged a Tiler to remove and replace balcony tiles at Mr Hoyle’s expenses.  Mr Hoyle could not obtain from the OC a Deed of Release and accordingly the Builder refused to provide the compensation payment to Mr Hoyle.  The issue arose in particular having regard to the fact that it was the OC’s responsibility to maintain common property in good and serviceable repair.  This common property included the tiles to the balcony and the membrane.  Section 62 of the Strata Scheme Management Act 1996 does not of itself entitlement reimbursement from the OC for payments made.  The difficulties caused by the approach of the Lot Owner was that the obligations of OC to repair and the rights of the OC against the Builder had been overcome by the work undertaken by Mr Hoyle and the Agreement reached between Mr Hoyle and the Builder.  The OC did not have an opportunity to properly consider the validity of the work required and more particularly the validity of the work that was undertaken by Mr Hoyle to attempt to rectify the defects.

Mr Hoyle sought to join the OC in the proceedings and the Tribunal refused that Application primarily because he chose to pursue the matter directly with the Builder rather than involve the OC.  Mr Hoyle sought to rely upon the case of Carre v OC Strata Plan, however appropriately that case was distinguished.  We refer to the Carre case in a further article. 

The lesson is that Lot Owners should be careful in attempting to carryout works that ultimately relates to the Common Property, and is the responsibility of the OC.  Also the OC and their managers must proceed carefully to undertake investigations to determine precise defects on Common Property, before undertaking rectification works and making formal arrangements regarding costs of those works.

We have instructions from a Lot Owner in relation to a very similar matter as that which Mr Hoyle found himself and the appropriate approach is to engage the OC and seek appropriate Orders for the OC to rectify the tiles and to rectify other Common Property defects.

If you are a Lot Owner and are considering adding altering or erecting a new structure that improves or enhances Common Property eg a balcony it is our recommendation that you seek advice as to the processes and approval required.  We suggest that you contact Richard Watson for a discussion/conference to enable us to advise you in relation to how to resolve these issues which are common place and for which often, advice is not sought.