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Owners Corporation Ordered to Pay Pecuniary Penalty of $5,000



In the decision of Thadani the Owners Corporation Strata Plan 46619 [2015] NSW CATCD 153 Senior Member Meadows ordered that the Respondent the Strata Owners Corporation pay a pecuniary penalty in the amount $5,000.  The Owners Corporation had failed to comply with an Order made against it to correct a Building Defect to the common property causing damage to an individual lot. 

The Applicants were Lot Owners of the Strata Plan who moved into their property in March 2010.  In May 2010 the Lot Owners became aware of a severe water ingress affecting the living room carpet of their property.  The Lot Owners reported the problem to the Strata Manager. 

Following an investigation it became clear the water was entering through the external wall between the Lot Owners’ living room and the balcony and also involved the double set of sliding doors which had an aluminium frame.  The Owners Corporation was responsible for the balcony as it was common property.  The failure of the Owners Corporation to maintain the common property was the cause of the water ingress and the damages to the Lot Owners’ property. 

The Owners Corporation initially rejected the explanation for the water ingress, however finally in 2011 the Owners Corporation engaged an appropriate Engineering and Building Diagnostic consultant who conducted an investigation.  The investigation revealed that the water source was from deficiencies in the sill flashing to the aluminium frames of the sliding doors and the cavity flashing along the base of the external masonry walls which were set between the Lot Owners’ living room and the balcony.  Despite being provided with the report the Owners Corporation did not undertake any rectification work.

In May 2012 the Lot Owners filed an Application for an Adjudication Order seeking an Order that the Owners Corporation carry out repairs to the common property in accordance with the recommendation of the Building Consultant and in accordance with two quotations that they had received.

The Adjudicator ordered that the Owners Corporation immediately carry out the repairs to the common property.  The Owners Corporation sought to appeal, however eventually agreed to carry out the work.  Subsequently some rectification work was performed badly by a Builder engaged by the Owners Corporation.  Further investigation established that the Builder had not rectified the deficiencies in the cavity flashing. 

The Lot Owners made several requests to the Owners Corporation to undertake further repairs, however there was no response. The Lot Owners were forced to file an Application with the Tribunal in September 2014.  The Applicants sought Orders amongst other things that the Owners Corporation pay a penalty under Section 202 of Strata Management Act.

The Senior Member found that he was satisfied that the Owners Corporation did contravene the NCAT Order of 21 September 2012. The work that had been conducted by the Owners Corporation did not succeed in preventing the water ingress. The reasons for the failure was that the Builder selected by the Owners Corporation, failed or refused to follow the reasonable scope of works. 

The Tribunal Member found that the Owners Corporation had not acted reasonably in relation to what was a simple issue.  The Senior Member imposed the full maximum penalty of $5,000.

Richard Watson and the Watson & Watson team are experienced Strata Lawyers.  It is not uncommon to see a failure by the Owners Corporation to maintain common property and for the Lot Owners to be adversely affected by the failure.  Notwithstanding the Lot Owners are unable to achieve or have the Owners Corporation undertake the maintenance of the common property as is required by the law. 

Usually Watson & Watson experienced Strata Lawyers, Sydney can engage with the Owners Corporation and Strata Managers and achieve an outcome whereby the work is undertaken by the Owners Corporation without the need to resort to the continued expensive Court cases as seems apparent in the case of Thadani which proceeded from 2010 until 2015.

You should never either as an Owners Corporation or an individual Lot Owner be in a position where the matter proceeds and you are met with an Application for Pecuniary Penalty and the other consequences. 

If you are an Owners Corporation or an aggrieved Lot Owner contact the experienced Strata Lawyers at Watson and Watson and we will be able to assist you in overcoming the difficulties that you find yourself in.  Please telephone Richard Watson or his Personal Assistant Shereen Da Gloria to discuss your important matter.

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