NEWSLETTER    ISSUE 12   October 2013

In this edition  of our newsletter we explain  what may result – ie an agent is compulsory  appointed  by the CTTT  – after significant  breaches  of  the Act  by  an  Owners  Corporation.  It  is  very  interesting  reading.  Also  as  a  complete  change  from our  normal  content,  I  have  included  a  joke  that  is  very  relevant  to  our  industry.  I  hope  you  find  it  as  funny  as  I  did.    We  end with an easy money saving tip.

SECTION 162  APPOINTMENTS – WHY,  AND WHAT HAPPENS

Whilst  most  of  our  managements  run  smoothly,  with  overall  agreement  between  owners,  strata  managers  are  being  sort more  and  more  frequently  to  be  appointed  under  s162  of  the  Strata  Schemes  Management  Act  (Act),  ie  a  compulsory appointed  agent.    Owners  may  seek  these  where  they  can  show  that  their  scheme  is  not  meeting  its  legal  obligations.  Circumstances may include:

  • The management structure of a strata scheme is not functioning or not functioning satisfactorily;
  • An  owners  corporation  has  failed  to  perform  one  or  more  of  its  duties,  including  the  s62  obligation  to  maintain  and  repair;  or
  • An owners corporation fails to comply with an order under the  Act.

Examples  of  where  an  owner’s  corporation  is  not  functioning  or  is  not  functioning  satisfactorily  are:  2-lot  stratas  where  votes are  deadlocked;  an  owners  corporation  is  failing  to  insure  their  scheme  adequately/at  all;  an  owners  corporation  is  not holding general meetings; or an owners corporation is otherwise acting in breach of the  Act.

Upon  the  Tribunal  making  a  S162  appointment,  it  is  important  to  note  that  the  agency  agreement  with  the  existing  strata manager is automatically terminated and the agent is not entitled to any remuneration after that termination.

Assuming  it  is  a  full  appointment,  the  new  agent  makes  all  of  the  decisions  of  the  owners  corporation  and  the  executive committee.  During  the  period  (normally  12  months  but  can  be  longer),  there  are  no  general  meetings  or  executive  committee meetings  where  owners  are  able  to  vote  as  neither  have  any  legal  power  to  make  decisions.  The  appointed  agent  makes all  of  the  decisions  including  passing  ordinary  resolutions,  special  resolutions  and  even  unanimous  resolutions.  Therefore, as well as standard things such as  insuring the  building  and carrying out  common property repairs, the appointed agent can  commence  legal  action,  enter  into  caretaker  agreements,  pass  by-laws  and  approve  the  alteration  of  common  property.

The  appointed  agent  is  not  even  required  send  notice  of  meetings  as  there  is  no  obligation  to  consult  with  owners,  as Andrew’s case showed, they can just send out minutes of their decisions.

The agent can be held accountable for  negligent  decisions, so it  is recommended  that  if  there is any potential for  dispute, the  agent  should obtain independent reports and engage  experts where necessary,  and follow the  recommendations  of those experts.    All of which must be paid for by the scheme.

At  the  end  of  the  term,  the  agent’s  appointment  automatically  ceases.    A  general  meeting  needs  to  be  held  immediately  to appoint an agent to carry out the usual duties.

NOAH’S ARK  TODAY!

The  Lord  appears  before  Noah  and  says,  “In  one  year  I  am  going  to  make  it  rain  and  cover  the  whole  earth  with  water  until it  is  all  destroyed.  But  I  want  you  to  save  the  righteous  people  and  two  of  every  kind  of  living  thing  on  the  earth.  Therefore  I am commanding you to build an ark.”

In  a  flash of  lightning God delivers the specifications for  the ark.  Fearful and trembling Noah takes the plans and agrees to build the ark.

“Remember”, said the Lord, “You must complete the ark and bring everything aboard in one year”.

Exactly  one  year  later  fierce  storm  clouds  form,  lightning  fills  the  sky  and  all  the  seas  of  the  earth  rise  up  in  tumult.  The  Lord reappears and sees Noah sitting in his front yard weeping.

“Noah!” he shouts. “Where is the ark?”

“Lord, please forgive me!” cries Noah.  “I did my best but there were big problems.”

“First,  I  had  to  get  development  consent  from  the  local  council.  They  said  that  building  the  ark  was  a  non-complying development so I had to go to the Land and Environment Court to overturn their decision.”

“Then  they  said  that  because  of  the  flood  I  had  to  supply  an  Environmental  Impact  Statement.  So  I  commissioned  an environmental consultant to write the impact statement.”

“Then they said they wanted a plan of the flood plain to update their records.  I sent them a globe of the world.”

“I  finally  got  my  development  consent  and  then  I  had  to  apply  for  a  construction  certificate.  The  council  immediately  told  me that  the  ark  didn’t  comply  with  the  Building  Code  of  Australia  and  didn’t  fulfil  the  BASIX  requirements.  I  had  to  get  the  plans redrawn.”

“Because  the  ark  was  over  25  m  tall  council  sent  the  plans  to  the  Fire  Department.  They  said  I  had  to  install  a  sprinkler system.  I had to get the plans redrawn again.”

“I  finally  got  my  construction  certificate  and  started  work  with  a  team  of  carpenters  24/7  to  catch  up  for  lost  time.  Then council  issued  a  stop  work  order  on  the  job  because  I  was  breaching  the  terms  of  the  development  consent.  I  could  only work 9-5 Monday to Friday and only use power tools between 10 and 4.”

“To  try  and  speed  things  up  I  decided  to  outsource  some  of  the  construction  work  offshore.  Then  my  carpenters  went  on strike.  They claimed that the offshore production standards would make the ark unsafe for the people who got on board.”

“After  I  finally  sorted  all  that  out  the  RSPCA  took  action  to  stop  me  claiming  I  would  be  engaging  in  live  export  of  animals without a permit.”

“If  that  wasn’t  enough  the  Humanist  Society  took  an  anti-discrimination  action  against  me  because  I  was  refusing  to  take godless, unbelieving people aboard.”

Just  when  I  thought  it  couldn’t  get  any  worse  the  Federal  Police  seized  all  of  my  assets  claiming  that  the  ark  was  part  of  a people smuggling operation.”

“I really don’t think I can get the ark completed for at least 5 years”.

The sky began to clear, the sun began to shine and the seas began to calm.  A  rainbow arched across the sky.

Noah looked up hopefully.  “You mean you are not going to destroy the earth Lord?”

“No”, said the Lord sadly.  “The Government’s already done it!”

USEFUL TIP  ON SAVING MONEY

Whilst  it  may  seem  obvious  we  often  find  scheme’s  do  not  have  a  plan  for  regular  maintenance  of  items  such  as  hot  water services, garage doors, pipes that block regularly, pumps, gutter cleans etc.

Like  a  car,  maintenance  servicing  ensures  things  work  at  their  optimum  level  and  minimise  break  downs.    If  you  do  not  carry out  regular  maintenance,  it  can  create  huge  inconvenience  and  often  the  costs  will  be  higher.    For  instance  clearing  a  sewer line  that  is  chocking  periodically  because  of  tree  roots,  simply  by  using  tablets  you  can  get  from  a  hardware  store  will  go  a long  way  to  reducing  back-ups  of  the  system.    Back-ups  usually  occur  out  of  work  hours,  ie  weekends  or  evenings,  because all  the residents are home  and using  the plumbing,  which  will  cost sustainably  more to rectify if you need  to call  a plumber, than during normal work hours.

We  have  also  seen  such  services  be  effective  with  respect  to  garage  door  break  downs  in  two  large  schemes  –  both  in  very exposed  locations  ie  on  main  roads.    Maintenance  has  been  able  to  completely  prevent  issues,  which  would  otherwise  see the door propped open, leaving the car park open for anyone to access and cause damage – particularly on weekends.

Please  talk  to  us  about  your  services  and  what  type  of  periodic  attention  may  be  required,  as  it  is  much  better  to  prevent breakdowns and other crisis, than paying to fix them.

AS ANOTHER  YEAR  ENDS

This  is  our  last  edition  for  2013.    We  thank  you  all  for  your  ongoing  support  and  wish  you  a  safe  and  relaxing  festive  season.  We  look  forward  to  bringing  you  further  industry  updates  and  information  in  2014,  particularly  with  new  strata  legislation  to be released next year.