Podcast: Lawyer in the Hot Seat, part 2

Welcome to the second part of Lawyer In The Hot Seat, in which strata lawyer (and Flat Chat sponsor) David Bannerman invited us on to his webinar.

This week, Jimmy asks and David answers your questions about the NSW strata information hub and whether it might deter people from taking office-bearer roles in strata committees.

On short-term letting, David suggests that an over-crowding by-law may be the most effective way of dealing with abuses, especially with its much higher fines.

---

LISTEN HERE

---

We discuss strata committees wrongly using OC funds for political campaigns – even when they are strata-related (such as pro or anti-pets and EV charging).

We also look at questions about the right to view CCTV after a theft from a car, who compensates a tenant when their parking is closed off, a two-lot strata scheme with no records, inadequate lighting on a dark pathway and what you can do when your upstairs neighbour exposes their floorboards and becomes a noise nuisance.

That’s all in this week’s Flat Chat Wrap.

If you enjoyed listening to this podcast (or reading the transcript), please share it with your friends using the social media buttons on this page.

TRANSCRIPT IN FULL

Jimmy  00:00

Hello, this is the second part of the coverage of our webinar, ‘Lawyer in the Hot Seat,’ with strata lawyer, David Bannerman. This week, we pick up on the question of the Strata Hub; the information repository, that some people think might be asking us to give too much information, such as personal phone numbers and email addresses. There’s a whole heap of other stuff, including some questions that were sent in, as we were doing the webinar. So, sit back and enjoy. Once again, the sound quality isn’t up to our usual standards, because we recorded it on Zoom, but it’s okay. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review and this is the Flat Chat Wrap.

Jimmy

The hub; the famous Strata Hub, David… The question is, how will owners corporations entice strata committee members to become office bearers, when their private email addresses and phone numbers will be available to every resident of the building (and owner, who might not be a resident). Do you see that as an issue, coming up?

David Bannerman  01:24

The Strata Hub is certainly a bone of contention at the moment, with the strata industry, particularly the strata managers. They’re concerned, that they will lose some members who are willing to be office bearers, because the two office bearer’s positions will be shared with all the owners. The secretary’s position and the chairperson’s position, and the way it’s framed; even though the manager’s delegated the functions, that won’t suffice, by simply inserting the strata manager’s details. It will need to be the individual committee person, who’s appointed as a chairperson, and likewise, the secretary. That is a position there that will also be disclosed to various parties, being the emergency contact person, such as the police and emergency services. Now, the strata managing agent can be appointed to that position. I think that in small buildings, where people already know everybody, it won’t have any impact on that position, but I think that in larger buildings, like 100-odd lots, where there could be a lot more emails than what a secretary or chairperson might wish to receive from random occupants or owners, that they may prefer not to take that position. So, it could have an impact on that larger scale.

Jimmy  02:49

Yes, and I think the problem is that, as many people have said, it’s hard enough to get people to do the job sometimes, because the kind of people that you want to be in the position of chair or secretary, are smart, intelligent, successful people, who might be already busy, being smart, intelligent and successful in their working life. They certainly don’t want to be sitting there at work and get an email saying ‘what about that barking dog in flat 17?’ You know, it’s that kind of thing; or the abusive ones, that occasionally come up. I remember years ago, somebody said to me that one resident out of every 50 was crazy in strata and I said this to a strata manager, and he said “I want to manage that building, because that’s a very low proportion.” What can be said about that, is that (and it’s really an agenda item at an AGM), a payment for past services can be provided from the owners corporation, to that committee member for that service provided, but it’s rarely put up, at the AGM. Yes. I do know of buildings, where the chair, especially, expects this money to be paid to them and makes it quite clear at the AGM, that if that money is not forthcoming for the last year, they will not be providing their services for the next year.

David Bannerman  04:25

That’s one way of enticing support, I guess!

Jimmy  04:31

Right. What are the chances of getting a cost order in proceedings, where you are the successful party? This is talking about NCAT and disputes, obviously.

David Bannerman  04:42

So in NCAT, the tribunal, unlike a court, has different rules and so, the court rules are that, if you’re successful, costs follow the event. In the tribunal if you’re successful and you can establish special circumstances (not extraordinary, but special circumstances), then costs should follow the event, such as, it’s a complex matter… It’s over $30,000; as a couple of examples of special circumstances. And an interesting thing that has been happening (which we’re seeing more of), is where an owner succeeds in an application against the owners corporation and the owners corporation incur legal costs in NCAT, in trying to defend it. Well, the owners corporation has to raise a special levy and exclude that lot owner from its legal costs and if it was required to pay costs to the owner, it would need to exclude the owner from contributing to that special levy for those costs, as well. It effectively makes it a cost-neutral event, for the successful owner, because they have to pay their own costs. Now, the exceptional circumstances include things like, unnecessarily delaying the proceedings… If you’ve got somebody who’s continually failing to comply with the directions from the tribunal to put on evidence, and it’s dragged the proceedings on, which has added costs, with further attendances at the tribunal, that could also be considered a special circumstance.

Jimmy  06:11

Have you ever encountered a case where somebody has won the case, but had costs awarded against them?

David Bannerman  06:18

No, not in the tribunal. 

Jimmy  06:21

Right. Somebody was writing the other day, saying that they’d been involved in a case where the other person was right under the law, but made such a hash of their presentation and kept bringing in delays and dumping piles of new evidence at every meeting, so that the members said “okay, you win the case, but I’m awarding costs against you,” which seems fair. And you’ve just answered the next question, which is ‘does a lot owner have to contribute to costs, when a case has been taken against them?’ Basically, either if you take a case against your strata scheme, or it takes a case against you, and you win, they then must raise a special levy for the expenses incurred in… And this is not costs; this is expenses, isn’t it?

David Bannerman  07:11

Yes, that’s right. If you obtained an order as an owner, against an owners corporation to conduct repairs, you’d be contributing to the costs of repairing; it’s just the legal costs, that you’re not contributing towards.

Jimmy  07:28

So for instance, if you said to your owners corporation “you’ve got to repair that balcony; it’s common property… It needs to be repaired,” and they hire a lawyer (not you, because if they’d hired you, they would win)… They hire a lawyer, and they lose; they then have to raise the cost of taking that case; of defending that case, and exclude the owner, who took them to the tribunal. And vice versa; if they take an order to tribunal and lose, they’ve got to charge the cost against them. I’ve spoken to a couple of strata lawyers about this, and they say, it’s not something that comes up as often as it should, because people aren’t aware of it.

David Bannerman  08:13

They just haven’t been aware of it; yes.

Jimmy  08:14

Do you think it will deter some sort of fishing expedition type-cases, where the owners corporation is saying “hey, we’re big and we’ve got lots of money and we’re going to take on this owner and teach them a lesson…” If they then have to explain to the other owners “oh, by the way, you’re paying for this, but they aren’t,” do you think that will deter them; cool their jets a bit?

David Bannerman  08:39

Cost consequences in litigation are always a serious consideration, because people can run litigation to make it expensive, or run it in a way to make it expensive. It’s a strategy that’s been employed for centuries; it’s what we call attrition. You try and wear somebody down over a period of time and it’s not something to be taken lightly. I mean, the benefit that owners corporation’s had in defending a matter, is that typically, as part of a special benefit with a building…Some insurance, they’ll have some of their legal costs paid, when defending a matter which has reasonable prospects of success. They can sometimes have their defence costs covered, but the lot owner doesn’t get any such benefit, who’s taking the action against the owners corporation.

Jimmy  09:28

Okay, here’s one of my favourite topics; Airbnb. I think I am Airbnb’s  public enemy number two, in Australia. Number one would be (I can’t remember his name; the guy who started ‘Inside Airbnb,’ that tells us how many apartments are actually being let on Airbnb, rather than what they tell us), which always seems to be, just a bit off, for some reason… They seem to be unable to get accurate figures. Anyway, short-term letting… ‘What can I do when the occupant is being raucous, and having wild parties and disturbing the peace?’ So I’m guessing this is the beginning of the weekend, and the Airbnb guests have come in, and they’re already partying by five o’clock on Friday, and they’re gonna keep partying until five o’clock on Sunday.

David Bannerman  10:25

Yes, so you’ve got a very short window of time. You’ve got the police, who could intervene, but apart from the police, you’ve got to learn from that event and try and ensure it didn’t happen again. You’d want to put up a bylaw, to preclude that activity from happening; to prevent it from being advertised in the first place. And then, if and when it looks like certain people aren’t complying, you’d want to try and enforce the bylaw. You might need to get evidence from Fair Trading, that they’ve obtained under the Code of Conduct that they have with the operator, to prove the amount of times it’s been let out, to prove the case and get a penalty against the actual owner. Not the occupant, because you won’t know who it is, potentially. There hasn’t been a lot of cases… Since they’ve introduced the law, there’s been COVID, so there hasn’t been a lot of short-term letting and now with the relaxation of COVID rules, and people’s willingness to travel again, it’s certainly on the rise. And as far as seeing what the tribunal does in relation to the enforcement of penalties for non-compliance, it’s yet to be seen. I haven’t seen any cases come across, with the new laws in place. What’s interesting about that bylaw breach, is that it’s five times; and there’s a short-term letting bylaw breach, which is five times the value of the short-term letting. So if you’ve got an overcrowding bylaw, you limit the number of bedrooms; occupants per bedroom to two… You give that penalty, and someone breaches that, that’s five times the penalty for breaching a short-term letting bylaw. If somebody repeat-offends, that can be doubled. So $1,100, for overcrowding, or it can be $2200. But at $1,100 for a penalty, when people are making more revenue than that… The short-term letting event itself and they know how difficult and slow the compliance might be, to get the order and things like that… It could take six months, but they’ve made a lot more revenue. It’s certainly something which I think they’re looking at tackling, in the next round of strata review reform; to bring up the penalty rates, so that it actually is a deterrent and that’s for bylaws across the board.

Jimmy  12:49

Now, while COVID was happening (very quietly), the blacklist and the register came in, in New South Wales. We haven’t really seen that take effect yet, have we?

David Bannerman  13:02

That’s right.

Jimmy  13:04

But yeah, it’s interesting. I was interested in what they’ve done up in Noosa, in Queensland. If you want to have short-term letting in Queensland (in Noosa, particularly), you have to identify a person who lives within 30 minutes of your property, who can be called if there’s any problems (because they do have a lot of problems up there). I don’t know how well it works, but they have a 24-hour hotline, that you call and all they do is call the person who is supposed to come and sort out the problem. So, I’ll be keeping an eye on that and we’ll see how that goes. David, we’ve got so many questions, I’m going to leave it; you can choose… Shall we keep going with the questions, or shall we go to the q & a?

David Bannerman  13:49

Whatever you like, Jimmy.

Jimmy  13:50

I was hoping you wouldn’t make me take responsibility. Okay, I’m going to look; I’m gonna move around here. Here’s one… ‘Our strata committee recently donated a considerable amount of OC funds, without a special resolution, to support political lobbying activities, to influence the New South Wales government to allow strata plans to be the sole decision-maker on issues such as allowing or disallowing pets in strata. Setting aside that particular issue, is a strata committee permitted by the Act (without the support of a special resolution), to use funds in this way?’

David Bannerman  14:27

With or without a special resolution, it’s not within the functions or administration of an owners corporation, to spend funds in that fashion.

Jimmy  14:36

Right, so you couldn’t even argue that this is for the greater good of everybody in the strata building?

David Bannerman  14:41

No. What should have occurred, was something like, to say “well, if you would like to help our fellow committee members in supporting this, can you please make your own contribution direct and let us know what you’ve done, so we can write to them and say what we’ve done.” The use of the owners corporations’ funds for that purpose, is inappropriate.

Jimmy  15:06

But, it would be appropriate for them to use the mailing list that they have, of everyone’s email address to say ‘hey, we are supporting this and we suggest that you donate to this,” or is that even going beyond the pale?

David Bannerman  15:21

It’s a good question, because any owner can do inspection of the records. They are the owners corporations’ records, and all email addresses are to be provided upon inspection, they can’t be excluded. A  lot of strata rolls will these days, have as the address for service of notice, the email address, because most people will be getting service notices via email. So if you did get the strata roll, or you went through the emails in the correspondence file, and you got whatever email addresses you wanted to, there’s nothing to prevent you from writing to those people, to put forward a position on something, or seek encouragement, or support somewhere else.

Jimmy  16:06

Right. I’m going to do another little section here, that I’ve invented, called ‘Case or no Case.’ So, it’s kind of like ‘Q and A,’ which as we all know, is initials for case, or no case. So, quick responses, David… ‘My friend’s car was broken into while it was parked in visitor parking. The strata manager refuses to share the CCTV footage with me, for privacy reasons. What can I do?’

David Bannerman  16:39

It’s a good question. Let’s say the records are held on site; the owner is entitled, when they do the inspection of the scheme’s records, to access those records, because it’s just another form of record, being an electronic record. But if the record was destroyed, say for instance, the data is only kept for seven days… There was a recent tribunal decision, were there were two self-represented parties and it was said ‘well, if the records are destroyed, they don’t need to be produced.’ That sort of contrasts with the requirement to keep records for seven years in an owners corporation. But let’s say there was an alternative situation, where there was security cameras, and there was an off-site holder of the data. That’s not a record of the owners corporation; that person could requisition a motion for a general meeting to be voted upon seek, a decision or instruction from the owners corporation to thereafter, access the records, but they’d need to get a vote upon that,  and some form of authority, because it’s not the owners corporations’ records.

Jimmy  17:45

So if for instance, the CCTV recording isn’t being held by the strata manager, then it is not legally a document that must be produced on the request of lot owners?

David Bannerman  18:01

It could well be held onsite. So, there might be a recording device, that captures; there might be a hard drive, an MDF room, or something like that. So that’s still a record in the control of the owners corporation, which would be needing to be produced, upon the inspection of the records.

Jimmy  18:21

And if anybody’s interested, there is a video on the Flat Chat website, of a strata secretaries’ car being set on fire, which is really sad for them and really awful, but quite interesting. A building closes off its parking, for repairs, and nobody can come in and out of the parking and a tenant says “I have paid for parking as part of my lease, and now I don’t have parking.” Is she entitled to compensation, and who would it be from?

David Bannerman  18:58

Typically, the lease would provide that there’d be an abatement, so there would be a reduction in rent, which means the landlord would get less rent, which means the landlord would be the one looking for compensation and he could look for compensation against the owners corporation, for failing in its duty to repair and maintain the common property.

Jimmy  19:18

But what if they say “but it’s repairing and maintaining the common property… That means that we’ve had to lock the carpark and we’re all in the same boat…” Is that a reasonable argument?

David Bannerman  19:29

There’s two streams of thought. Firstly, if the carpark was closed because of disrepair, and they weren’t conducting repairs, then yes, the owners corporations’ paying the loss of rent. If the car parks’ closed on the second stream of thought, because they are conducting the repairs, then it’s open to argument that the owners corporation isn’t liable, but I think you’d find that the reason that the car park was closed at all, was because of the disrepair, but they would be liable. There’s a possible defence to say that “well, it’s not closed because of disrepair; it’s closed because we are repairing.” But, why are you repairing and why is it so extensive that you’ve got to close… Which would probably land back in the owners corporations’ liability.

Jimmy  20:17

So, basically, the tenant can expect compensation or some relief from the landlord. The landlord then, can basically take it up with the owners corporation and, good luck with that. Okay. A two-lots’ scheme owner; there’s no admin fund, no sinking fund, no insurance, financials or meeting minutes, whatsoever. It’s conveyancer told her not to worry, because two-lot schemes are exempt from governance, which we know is not true. Is there any recourse against the conveyancer, now that this person has found that there should have been proper meetings and minutes and all the rest of it?

David Bannerman  20:59

Where there might be recourse more readily found, is in the Section 109 certificate; now called the 184 Certificate. It’s a document that the secretary of the owners corporation would hand over, just on settlement. So, just before the purchase of the property, saying ‘this is a financial snapshot; this is what’s owed. These are the anticipated common property expenses; take it or leave it.’ Say for instance, there was undisclosed special expenses, exceeding 1% of the price on the standard contract, then the purchaser could have rescinded and not taken it. But if there was a failure to disclose those expenses, because they didn’t know; they hadn’t been keeping records… They hadn’t done the 10 year sinking-fund plan. It was just basically, each party cut a check for varying costs over the years and they didn’t really have any records, well, then whoever provided that certificate, could be paying that owners’ share of whatever they had to contribute, for failing to incorporate the relevant information in that 184 Certificate. But yes, as you mentioned before, you do need to comply. There’s only certain things you don’t need to comply with, and that’s in respect of insurance, where you’ve got two buildings that are separate, and they’re not sharing common property. They don’t have to worry about the buildings’ insurance; they could just take out their own separate insurances. But otherwise, all other compliance requirements need to be met. And that’s probably the easiest time to get a Section 237,  because there’s two lots; one person wants to comply, the other one doesn’t. The scheme’s not functioning. 237 manager appointed; the strata manager comes in, recreates the financial situation, and starts to put the compliance measures in place.

Jimmy  22:50

Right. So here’s an interesting one. ‘Our common areas have inadequate lighting at night. The strata committee has refused to address the issue; who’s responsible, or liable for any accidents, given the issue has been raised with the strata committee?’

David Bannerman  23:06

Occupiers’ liability. It’s the same whether in a strata building, or not. You need to make sure that if an occupier comes on there, and there’s a risk, that they’re informed of the risk before they enter and possibly hurt themselves. If the owners corporation wants to upgrade its lighting, they would need a special resolution to do that. If somebody goes in and hurts themselves, because of the inadequate lighting, they would want to then put in a claim, against the public liability insurance. If the committee is aware of risk, and they’re doing nothing about it, they want to make sure that they’re passing that onto the public liability insurer, so that the public liability insurer can work out whether it’s going to continue to insure the risk, or not. If they don’t and there’s an incident, and they are aware of the risk, then the public liability insurer might deny the claim

Jimmy  23:53

But are there guidelines on how much light there should be in certain areas? I mean, some people might not want bright lights outside the building, because they shine into their rooms.

David Bannerman  24:06

I’m not aware of requirements for external lighting, unfortunately. It isn’t a problem that we’ve come across.

Jimmy  24:15

Alright, floor covering… Somebody’s upstairs neighbours have lifted their carpet and insulation, polished the floorboards. It’s not a concrete floor. They haven’t put down timber; the timber was there, because it’s structural and now they can hear the people moving around upstairs. They put down rugs; it hasn’t made much difference, and it wouldn’t. And they’re asking: look, there’s zero chance of getting acoustic engineers into test, because the people upstairs just won’t let them in. What can they do?

David Bannerman  24:48

You don’t need to have an acoustic engineers’ report. Almost every strata scheme will have a bylaw that will say that. There’s two things… We talked about ‘nuisance’ earlier; noise can be a nuisance and you can apply under Section 153 to say that they’re conducting themselves in a way that the noise is escaping their apartment into mine below, and it’s creating a nuisance. Alternatively though, the easier course would be to rely on the standard bylaw 14, which says that people will treat the floor, so as to not unreasonably disturb the peace and enjoyment of the person below. That doesn’t mean wall-to-wall carpet; that means floor coverings. So to prove that you’re suffering the interference, you don’t need to have an acoustic report, you just need to have a log. ‘I heard this on this date, from this room; the noise came from here.’ You just create a log. That would be your evidence. Ideally, you’d have it corroborated by more than one person, so that you might not be construed as someone who’s hypersensitive, and then you’d submit that evidence and you’d go for orders, or a treatment being applied to the floor, to prevent that noise.

Jimmy  26:00

Right. Because I mean, the tribunal will never actually say ‘you must put down carpet,’ will they?  They’ll say ‘you’ve got to stop the noise.’

David Bannerman  26:11

The wording in the bylaw to meet compliance, is floor coverings.

Jimmy  26:14

Right. ‘Can a bylaw protect any abuse from strata owners to the committee members’ details being used wrongly from the Hub? Can you pass a bylaw, saying owners may not use the phone numbers and email address to abuse members of the committee?’ I’m thinking, no.

David Bannerman  26:31

You’ve got rights under the Telecommunications Act, regarding people using electronic devices for harassment, so that’s a Commonwealth offence. You can have a bylaw, which enshrines and follows a Commonwealth law. And the reason and benefit that you’d put that in the bylaw, is that you could have a decision from the committee or a managing agent, with delegated authority, issuing a notice to comply and then being preceded with on that basis. So you could have something that follows the Commonwealth law on that basis, and enforces it as a bylaw.

Jimmy  27:07

Right. Now, it is 429. We’ve been doing this for 59 minutes; we have not, in no way run out of questions, I have to say. If anybody wants to engage in this further, if you have never been to the Flat Chat website, we have a forum there; very lively, quite informative and you can ask a question there. I try to let other owners answer the question, because that’s part of the engagement with the website, which means occasionally, somebody’s question gets completely ignored, because I forget to go back and look at it. It’s a very inefficient system, but it kind of works for me. And then you have David Bannerman, one of the top strata lawyers in New South Wales, if not the country. He will give you good advice. He might charge you for it…

David Bannerman  28:09

We have a lot of stuff on the website, which answers and addresses a lot of the things we talked about today. So if you try the search function there, and you can’t find the answer, feel free to send an email and we’ll endeavour to give you an answer.

Jimmy  28:24

All these questions that have been sent in, that haven’t been addressed, you’re going to try and get to them, over the next week or two, is that correct?

David Bannerman  28:31

That’s right.

Jimmy  28:33

David, thank you very much for hosting this; for hosting me. I don’t mind a chat, as you know. And thank you, everybody. We were up to about 150 participants at one point, so that’s pretty good. Thanks very much, and thank you all for listening in.

David Bannerman  28:57

Thanks, Jimmy.

Jimmy  29:01

Thanks for listening to the Flat Chat Wrap podcast. You’ll find links to the stories and other references on our website, flatchat.com.au And if you haven’t already done so, you can subscribe to this podcast completely free on Apple podcasts, Google podcasts, Spotify, Stitcher, or your favourite pod-catcher. Just search for Flat Chat Wrap with a W, click on subscribe, and you’ll get this podcast every week, without even trying. Thanks again. Talk to you again next week.