Company Tile disputes head for Magistrates Court

Company Title laws are about to get a big shake-up, as Richard d’Apice, of our sponsors Makinson and d’Apice, explains.

Reform of Company Title Home Unit Disputes – At Last!!

The NSW Government and, in particular, the Attorney-General Greg Smith MP, is to be congratulated on a long overdue reform of the management of disputes in Company Title buildings.  The reforms follow (but do not entirely mirror) the 2007 recommendations of the NSW Law Reform Commission Report on “Disputes in Company Title home units”.

The scheme of the Bill is to refer many (but not all) disputes within Company Title buildings to the Local Court rather than (as is presently the case) exclusively to the Supreme Court.  It is hoped that this will achieve considerable savings in costs and in the speed of resolution of such disputes.

The amendments depend upon a number of new definitions which it is convenient to set out extensively:

1.    Interested party means:

(a)   the Company Title corporation;

(b)    a shareholder or former shareholder;

(c)    a resident or former resident of premises on land owned by such a corporation.

The court’s jurisdiction extends to a dispute that involves or relates to conduct that occurred before the commencement of the amending Act.

2.    A Company Title Corporation is a company registered under the Corporations Act that is the owner of land if ownership of shares in the company entitles the owner of the shares to the exclusive use and occupation of residential premises on the land in respect of community land. 

The limitation in this definition to a company which has shares which entitle the shareholder to exclusive use and occupation.  This may exclude those companies where the ownership of shares entitles the shareholder to a lease on certain terms.  Discussions will need to take place on this subject, with the Attorney’s advisors.

It is regrettable that the Act does not extend to Home Unit Co-operatives.

3.    A Company Title Home Units Dispute is defined as dispute between interested parties about:

(a)    health, safety and security of persons occupying or visiting the land (including, for example, safety of children on the premises and waste disposal);

(b)    common property – a concept which has no defined meaning in the legislation but it may be taken to refer to any part of the land or buildings owned by the company in respect of which a shareholder does not have a right of exclusive use or occupation (including, for example, parking and vehicle access, repair and maintenance, design and appearance).

(c)    the use of residential premises occupied by a shareholder (including, for example, the external appearance of the premises or the keeping of pets);

(d)    behaviour of persons occupying or visiting the premises;

(e)    a refusal by the company to allow a shareholder to grant a lease or license in respect of the unit; and

(f)    administrative matters relating to the running of the company (including, for example, levies).

However, the expression Company Title Home Unit Dispute does not include:

(a)    a dispute relating to a residential tenancy to which the Residential Tenancies Act 2010 applies;

(b)    the dispute under a lease to which the Landlord and Tenant (Amendment) Act 1948 applies;

(c)    a dispute about the sale, transfer or other disposition of shares in the corporation or the forfeiture of such shares;

(d)    a dispute about any matter that is a superior court matter within the meaning of the Corporations Act 2001.  Unhelpfully, the Corporation Act defines a superior court matter as meaning a civil matter that the Corporations Act clearly intends to be dealt with only by a superior court (for example, by use of the expression “the Court“).

4.    Available Orders

The Local Court may make Orders:

(a)    requiring a person to do or refrain from doing any act;
(b)    for the payment of damages or other money;
(c)    declaring the rights and obligations arising under the Constitution of a corporation or any other contract or agreement;
(d)    declaring the meaning of any term of a Constitution or of any other contract or agreement;
(e)    declaring that any such term is or is not void, invalidate or otherwise unenforceable.

The Local Court’s jurisdictional limits (Small Claims Division – $10,000.00; General Division – $100,000.00) apply equally to Company Title disputes.

The Government did not, as recommended by the Law Reform Commission, grant the jurisdiction to the CTTT because of doubts about whether a State tribunal (as distinct from a State court) can determine disputes which arise under a law of the Commonwealth.

The Bill is a good one.  It could be slightly better but even in its current state it is a considerable advance on the present position.

The Bill is to be found here.

The Attorney’s speech on the introduction on the Bill can be found here.